Last December, leaders of the euro area Member States requested their Finance Ministers to continue their work on a deeper and fairer EMU, in order to improve resilience to future economic shocks and facilitate sustainable and inclusive growth for Europe’s citizens. Finance Ministers have been working on these important elements for some time now and will, in the coming days, finalise a set of proposals put forward for consideration by leaders at the Euro Summit on 21 June.
Welcoming the work that has taken place to date, Minister Donohoe said: ‘I am confident that my colleagues and I can provide strong direction on the issues before us this week so that we can continue to build momentum on completing the architecture of Economic and Monetary Union. Along with what we are doing at home, these decisions taken here in Luxembourg will help strengthen resilience at EU level and will help address future challenges that lie ahead, not least those relating to the UK departure from the European Union’.
One of the main decisions relates to improving the European Stability Mechanism (ESM – the EU’s rescue fund). The ESM has been very important in providing financial assistance to Member States experiencing a crisis and therefore in safeguarding the stability of the wider euro area. These reforms are aimed at making the institution better prepared for future crises. Today’s Eurogroup will reach broad agreement on changes to the existing Treaty underpinning the ESM so that the related legal documentation can be prepared later this year. This will allow national parliaments to begin ratification early next year.
The Eurogroup has also made progress on completing the Banking and Capital Markets Unions. The Banking Union was created to ensure that banks are stronger and better supervised. Should problems arise, banks can now be resolved more easily using funds contributed by banks across the euro area. Finance Ministers have been working on a number of risk reduction measures, in particular reductions on non-performing loans; and a roadmap to start political negotiations on a European Deposit Insurance Scheme. This European wide Deposit Insurance Scheme will build on the system of national deposit guarantee schemes currently in operation and aims to provide a stronger and more uniform degree of insurance cover for depositors.
Capital Markets Union supports the growth of SMEs and capital markets in smaller Member States by improving new and alternative sources of finance for businesses, which will be of benefit to Irish businesses and our financial services industry, as well as facilitating easier access to finance for those businesses across Europe.
The next EU Budget, to which Ireland will be a net contributor, can help to foster sustainable growth, put in place more effective reforms and help us build a better society that improves all our lives. As part of the work to prepare for this, Ministers will be aiming to reach agreement on the general features of a new budgetary instrument for competitiveness and convergence. The instrument will be open to members of the euro area and to Member States currently outside the euro area who are preparing to join the euro. It aims to support reform and investment projects that strengthen competitiveness and convergence in the euro area. Leaders agreed last December that the size of the budgetary instrument would be agreed in the context of the wider negotiations for the EU budget cycle that will begin in 2021 and agreement on the general features today will the first step in putting this in place.
Minister Donohoe concluded that: ‘Changes to the Eurozone are required and are necessary if we are to strengthen the EU and make it more effective for our citizens, our communities and businesses large and small. Working together we will achieve this’.
ENDS