Economic Dialogue on financial assistance to Cyprus:
- extracts of the exchange of views with Olli REHN, Vice-President of the EC and Jörg ASMUSSEN, ECB executive board member
EP Committee on Economic and Monetary Affairs
Lieu: Brussels, Belgium - European Parliament
End production: 08/05/2013 First transmission: 08/05/2013
European commissioner Olli Rehn and European Central Bank board member Jörg Asmussen attended a dialogue organized by the EP Committee on Economic and Monetary Affairs. The exchange of views continued the debate started on Tuesday. Then, Eurogrup president Jeroen Dijsselbloem explained that measures taken in Cyprus had the role to put the burden on those investors and the uninsured deposits in the two banks where the main risks were concentrated. Today, MEPs got a further chance to learn what is happening with the financial aid for Cyprus. In return for a €10 billion loan package from the EU, Cyprus agreed to raise another €13 billion through a banking reform that included a haircut imposed on uninsured deposits over €100,000. Initially plans to raise a levy on deposits below €100,000 were also discussed, but these were later shelved.
Only the original language version is authentic and it prevails in the event of its differing from the translated versions.
||Exterior shot of the EP, Brussels
||Arrival of Olli REHN, Vice-President of the EC in charge of Economic and Monetary Affairs and the Euro, ambience shots.
||SOUNDBITE (English) Olli REHN, Vice-President of the EC in charge of Economic and Monetary Affairs and the Euro: "There must be absolute clarity about secured deposits. In this respect, the Eurogroup and Cyprus took rapid corrective action and underlined that secured deposits indeed are secured in Europe."
||SOUNDBITE (English) Olli REHN, Vice-President of the EC in charge of Economic and Monetary Affairs and the Euro: "We have to recognize the structural problems of our decision-making in providing financial assistance in the euro-zone, and more widely in the EU. This calls for the completion of the Economic and Monetary Union, which should bring the current inter-governmental arrangements into the Community framework. We need to take care of accountability by involving the Parliament and we must strengthen the external representation of the euro area, so that we stand united and we speak united, for instance or especially within the IMF and the G20 context".
||SOUNDBITE (English) Olli REHN, Vice-President of the EC in charge of Economic and Monetary Affairs and the Euro: "Today, it is worth recalling that the reunification of the island would give a major boost to the economic and social development of Cyprus. Now it is indeed high time to revitalise the process leading towards reunification of Cyprus."
||SOUNDBITE (English) Jörg ASMUSSEN, ECB executive board member: "Despite the unprecedented steps taken so far, the banking sector has not yet been stabilised. The burden sharing arrangement negatively affected depositor confidence and required the introduction of temporary and proportionate capital controls and restrictions on deposit withdrawals. Short term risks are high, as the deep recession is expected to take a toll on banks’ balance sheets. The reliance of the largest bank on ELA continues to be exceptionally high. Hence, firm steps are needed to complete the financial sector reform so as to rebuild confidence in the viability of the banking system."
||SOUNDBITE (English) Jörg ASMUSSEN, ECB executive board member: "We urgently need a European framework for the resolution of financial institutions. This should include a clear set of commonly known ex ante rules for bail-in, buffers of 'bail-inable' assets and depositor preference. Regarding the latter, the new framework should place depositors at the top of the creditor hierarchy and ensure that the role of Deposit Guarantee Schemes (DGS) in resolution is limited to insuring eligible depositors. This will contribute to reducing the risks to financial stability by providing legal certainty and predictability to resolution."
||Cutaways (5 shots).