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The financial and economic crisis - a chronological overview - May 2010

The economic crisis has prompted intense and sustained action by the EU's national governments, the European Central Bank and the Commission. All have been working closely together to support growth and employment, ensure financial stability, and put in place a better governance system for the future.

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26 May 2010
Commission proposes Bank Resolution Funds financed by a bank levy

The Commission proposed to set up an EU network of bank resolution funds to finance future bank failures and maintain a stable financial system. The funds, established according to common rules and financed by a bank levy, would not be used to bail out or rescue banks. The Commission intends to lead G20 efforts in Toronto on 26-27 June to find a global approach based on these ideas.

>> Internal Market and Services. COM(2010) 254 final. Bank Resolution Funds
>> Internal Market and Services. Press release IP/10/610 Commission sets out vision for bank resolution funds Choose translations of the previous link 

21 May 2010
First task force meeting on economic governance

The task force includes Mr. Van Rompuy as President of the European Council, mostly Finance ministers as representatives of all 27 Member States, Commissioner Rehn, ECB President Trichet, and Eurogroup President Juncker. The task force will meet two more times before they send their progress report to the European Council of 17 June and their final report ready for the European Council in October 2010. 

In his statement following the first meeting, Mr Van Rompuy reported on the four objectives the participants agreed upon. The task force will hence concentrate on proposals of how to achieve greater budgetary discipline through a strengthened Stability and Growth Pact, reduce divergences in intra-EU competitiveness, create an effective crisis mechanism and strengthen economic governance.
>> President of the European Council. PCE 102/10   Remarks by Van Rompuy following the first meeting of the task force on economic governance
>> The President of the European Council

20 May 2010
MEMO/10/204. The EC proposals to reinforce economic governance in Europe Choose translations of the previous link 

19 May 2010
Commissioner Olli Rehn speech at European Parliament plenary session

>> Foundations for sustainable growth and job creation: safeguarding financial stability and reinforcing economic governance in Europe
Choose translations of the previous link 

17 - 18 May 2010
Eurogroup and ECOFIN meetings

Ministers agreed on a mandate for negotiations with the European Parliament to introduce harmonised EU rules for the management of alternative investment funds, such as hedge funds and private equity. The aim of the draft directive is to get to a harmonised framework for monitorring and supervising risks and to allow management throughout the EU single market under strict requirements.

Ministers also discussed further steps for a coordinated phasing out of bank guarantee schemes, with a particulalr focus to tighten pricing and provision conditions as of July 2010.

As to enhancing EU crisis prevention, management and prevention, Ministers supported the establishment of Cross Border Stability Groups (CBSGs) by mid-2011. These would be set up for all large EU cross-border financial groups and would have common tools for an effective coordination between national authorities. In addition, legal proposals for a coordinated and harmonised regulatory framework will be discussed in the autumn.

The Council also supported further Member States fiscal discipline measures by means of numercial fiscal rules, medium-term fiscal frameworks, budgetary procedures, and enforcement mechanisms with an adequate degree of flexibility. For an efficient implementation of the Stability and Growth Pact (SGP), Ministers called for a regular assessment and peer review of Member States fiscal frameworks.
>> Council  conclusions
>>The Eurogroup. Policies
>> Internal market and services. Commissioner Barnier. Press conference on financial regulatory reform

12 May 2010
Commission convergence report

The Commission concluded that Estonia meets the criteria for adopting the euro and made a proposal to the Council to this effect. The other eight countries with a so-called 'derogation' are assessed as having made uneven progress towards the euro and do not meet all the conditions for euro adoption.
>> Economic and Financial Affairs. Convergence report of the European Commission gives green light for Estonia

Commission Communication on Reinforcing economic policy coordination

In response to the recent crisis and the risk for the stability of the euro area, the Commission presented its plans to reinforce decisively economic policy coordination.

The aim of the measures is to strengthen the functioning of the Stability and Growth Pact, extend surveillance to macro-economic imbalances, align national budget and policy planning through a "European Semester" for early European economic policy coordination, and to make the European stabilisation mechanism decided on 9 May fully operational.
>> Economic and Financial Affairs. Reinforcing economic policy coordination in the EU and the euro area

Excessive deficit procedure for Bulgaria, Cyprus, Denmark, Finland and Luxembourg

In view of actual breaches in 2009 and planned breaches in 2010 of the reference value of 3% of GDP, the Commission adopted reports under the corrective arm of the Stability and Growth Pact for all these countries. Follow-up steps for the opening of the excessive deficit procedures are due to be decided after the opinions of the Economic and Financial Committee on 28 May 2010.

In assessing the Cypriot updated stability programme, the Commission invited Cyprus to further limit its 2010 deficit and accelerate fiscal consolidation and structural reform.
>> Economic and Financial Affairs. Commission presents excessive deficit reports for five countries
>> Economic and Financial Affairs. Commission assesses convergence programme of Cyprus

10 May 2010
European Central Bank financial market measures

Not affecting the stance of monetary policy, the ECB decided on several measures to address the severe tensions in certain market segments.
>> ECB decides on measures to address severe tensions in financial markets

9 May 2010
Extraordinary ECOFIN meeting

Ministers decided on the details of the comprehensive package of measures, including the European Financial Stabilisation Mechanism (EFSM) and the European Financial Stability Facility (EFSF) with a total of up to €500 billion based on strong conditionality and on terms and conditions similar to the IMF. Based on article 122.2 and an intergovernmental agreement of the euro area Member States, the mechanism provides financial assistance in the form of loans or credits to Member States in difficulties. The IMF will participate in this financing arrangements with an additional amount of at least €250 billion, bringing the total amount to €750 billion.  

European Financial Stabilisation Mechanism (EFSM)

Run by the European Commission, loans or credits based on the article 122.2 facility are foreseen for up to €60 billion to any Member State. With an implicit guarantee of the EU budget, money is raised on the financial markets.

European Financial Stability Facility (EFSF)

This special purpose vehicle European Financial Stability Facility under the intergovernmental agreement will guarantee on a pro-rata basis lending up to €440 billion to euro area Member States.

Ministers also welcomed the commitment of Spain and Portugal for further consolidation measures which will be presented at the ECOFIN meeting of 18 May. 
>> Coucil conclusions
>> Memo/10/173 of 10 May 2010. The European Stabilisation Mechanism Choose translations of the previous link 

8 May 2010
Summit of the Heads of State or Government of the euro area

The Summit finalised procedures to implement the €110 billion euros support package for Greece with a first disbursement to be made before 19 May. It also assessed the Greek government programme to bring its economy back to competitive and sustainable growth and job creation as ambitious and realistic.

In response to the current crisis, the leaders endorsed to accelerate consolidation and sustainibility of public finances, strict enforcement of recommendations under the Stability and Growth Pact, the creation of a European stabilisation mechanism, a strengthened euro area economic governance, and financial market regulation and supervision. The European Council of 17 - 18 June will further discuss this issue and Commission proposals.
>> European Council. Defending Greece and the eurozone
>> Statement of the Heads of State or Government of the euro area
>> Commission President Barroso. Statement following the meeting of the Heads of States and Government of the euro area

5 May 2010
Spring economic forecast

The speed of recovery is forecast to increasingly vary across EU countries, reflecting the extent of the housing-market correction needed, the size of the financial-services sector and the degree of internal and external imbalances. 
>> Economic and Financial Affairs. Europen economic forecasts - spring 2010

Comments by Council President on Greece

>> Herman Van Rompuy, President of the European Council. Comments on Greece and solidarity in the euro area

3 May 2010
European Central Bank suspension of minimum credit rating threshold for Greek bonds

The European Central Bank (ECB) announced it would until further notice accept Greek bonds as security for loans regardless of their rating. This follows the ECB assessment of the Greek economic and financial adjustment programme as appropriate. The suspension applies to all outstanding and new marketable debt instruments issued or guaranteed by the Greek government.
>> ECB announces change in eligibility of debt instruments issued or guaranteed by the Greek government

2 May 2010
Statement by Commissioner Rehn and IMF Managing Director Strauss-Kahn on Greece

Euro area Member States pledged a three-year programme total of €80 billion in bilateral loans. Under the conditions set out in the Eurogroup statement of 11 April, up to € 30 billion out of this programme will be made available for 2010. Its first disbursment will be made by 19 May.

In addition, IMF reached an agreement with the Greek authorities to support this program with a stand-by arrangement of about €30 billion, bringing the joint commitment to a total financing of €110 billion.

In a joint statement, Rehn and Strauss-Kahn said they were confident that Greece would rise to the challenge and succeed.
>> Economic and Financial Affairs. Euro area and IMF agreement on financial support programme for Greece

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