Commissioner Olli Rehn at press conference following Eurogroup meeting 21 March 2011
Today we have completed a massive and decisive effort to finalise a comprehensive response to the sovereign debt crisis. It has taken months of tough talks, but the determination to safeguard financial stability and a strong European commitment has prevailed: we now have a comprehensive strategy to strengthen the foundations of the euro area and to restore confidence in the euro area sovereign bond markets.
Our economic strategy consists of the following four building blocks that will together lead to a fundamental strengthening of EMU:
First, the EAMS are all pursuing fiscal consolidation and growth-enhancing structural reforms with full determination. This is particularly critical in countries under the spotlight, where full implementation of the announced measures is now of paramount importance to restore confidence.
Second, Council and Parliament are delivering on their commitment to reinforce economic governance by this summer. Last week, the Council agreed on its general approach on the Commission's legislative package, which is the cornerstone of our comprehensive response. The Council's approach respects the spirit of our six legislative proposals and is a sound negotiation mandate to reach an agreement with the EP. We are about to reach a new level of economic governance in the euro area by increasing the focus on debt, by extending our surveillance to the macro-economic imbalances, by strengthening our enforcement tools, and by reinforcing our national budgetary frameworks. These steps, together with the new "Pact for the euro", will lead to a quantum leap in reinforcing EU's economic governance.
Third, we agreed to reinforce our financial backstops, so that the so-called market forces can not have even the slightest doubt about our capacity to act even in the most stressed scenarios. Today, we took the decision to set up the permanent European Stability Mechanism from June 2013, with the effective lending capacity of 500 bn euros.
Fourth, very important, the banking sector repair must be completed to safeguard the provision of credit to the real economy, to enterprises and to households. The next round of bank stress tests will be conducted in the next months. The results will guide the necessary restructuring and possible recapitalisation of the banking sector. Ahead of the publication of the results the Member States will need to release their strategies for possible restructuring and possible recapitalisation of their vulnerable institutions. Such plans should be ready as soon as possible and include a detailed timeline.