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Mr Olli RHEN, Member of the European Commission (left), Mr Jean-Claude JUNCKER, Prime Minister of Luxembourg, President of the Eurogroup © The Council of the European Union Commission governance proposals agreed by Council
- European Council meeting expected to provide major impetus for strengthened economic coordination
- European leaders endorse “Pact for the Euro”
- European Banking Authority publishes details of upcoming EU-wide banking stress test
- European Systemic Risk Board holds first regular meeting
- EUR 4.6 billion bond issued to assist Ireland and Romania
- Commission Communication analyses smooth euro changeover in Estonia
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Mr Olli RHEN, Member of the European Commission (left), Mr Jean-Claude JUNCKER, Prime Minister of Luxembourg, President of the Eurogroup © The Council of the European Union Commission governance proposals agreed by Council

Meeting on 14-15 March, the ECOFIN Council of Finance ministers reached agreement on its position on the European Commission legislative proposals on economic governance of 29 September 2010. The package aims at strengthening economic governance in the EU and in the euro area. It includes legislation to strengthen the Stability and Growth Pact, introduce minimum requirements for national budgetary frameworks, prevent and correct macroeconomic imbalances and introduce gradual enforcement measures for non-compliant Member States more consistently and at an earlier stage. The agreement will enable the Hungarian Presidency to start negotiations with the European Parliament, with the aim of reaching an overall agreement in June, thus respecting the timetable set by the European Council.

Viewpoint
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...the Commission has been for a long time asking the Member States to commit to a higher level of economic policy coordination and stronger economic governance, especially in the euro area. And this is now accepted

José Manuel Durão Barroso, Président of the European Commission
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Mechanism © Thinkstock.com
European Council meeting expected to provide major impetus for strengthened economic coordination

At their meeting on 24-25 March, European leaders are expected to agree on a global package of measures to preserve financial stability and lay the ground for sustainable and job-creating growth. In particular, the Heads of State or Government will agree on the priorities for structural reform and fiscal consolidation, on the basis of the Commission's Annual Growth Survey, the first phase of the European semester. They are also expected to endorse the decisions taken at the meetings of 11 March (see article below) and 14-15 March, thereby clearing the way for establishment of the future European Stability Mechanism (ESM). They are also expected to finalise work on both the ESM and a strengthened European Financial Stabilisation Facility (EFSF).
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Informal Meeting of the Heads of State or Government of the Euro Area © The Council of the European Union
European leaders endorse “Pact for the Euro”

At their informal meeting on 11 March, European leaders of euro area countries endorsed the “Pact for the Euro” and agreed on important elements of the European Commission legislative proposals on economic governance of 29 September 2010. The pact for the euro establishes stronger economic policy coordination for competitiveness and convergence, and represents a strong political commitment by European heads of government. It will be consistent with and build on existing instruments such as EU 2020, the European Semester, the Stability and Growth Pact and the new macroeconomic surveillance framework. Non-euro area Member States have been invited to participate on a voluntary basis. Leaders also welcomed progress made by Greece and Ireland in the implementation of the on-going IMF/EU programmes, and praised Portugal’s economic reform package. They agreed that work on the European Stabilisation Mechanism (ESM) and the European Financial Stability Facility (EFSF) should be completed in time for the European Council in March. The pact for the euro will be formally adopted by the next European Council on 24 and 25 March.
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Bank sign © John Foxx – Thinkstock.com G20 leaders in Seoul 2010 © G20 Seoul Summit - All rights reserved
European Banking Authority publishes details of upcoming EU-wide banking stress test

On 18 March, the European Banking Authority (EBA) published documents explaining the scenarios and methodology for its 2011 EU-wide stress test. The stress test will be applied on a sample of European banks covering over 60% of total EU banking assets. It assesses what might happen to banks if external circumstances deteriorate markedly, and helps to identify vulnerabilities and relevant remedial action, including strengthening capital levels. The tests will be carried out between March and June. After a series of national checks, all results will be submitted centrally to the EBA, where they will undergo an extensive quality control and peer review process. The final set of results will be reviewed by the EBA’s Board of Supervisors in early June before final publication later that month.
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Clock Mechanism © Thinkstock.com
European Systemic Risk Board holds first regular meeting

The General Board of the European Systemic Risk Board (ESRB) held its first regular meeting on 18 March. At its meeting, the board explored the role the ESRB could play – together with the European Banking Authority (EBA) – in implementing countercyclical capital buffers once the Basel agreements are transposed into EU law. It also discussed the interaction between the ESRB and the EU institutions and how the ESRB will be involved in the stress tests carried out by the European Supervisory Authorities (ESAs). The board assessed agreements on the exchange of information between the ESRB and the ESAs. This exchange of information will support the members of the European System of Financial Supervision (ESFS) in detecting and mitigating macro and micro-prudential risks. Finally, the General Board selected the 15 members of the Advisory Scientific Committee (ASC), which is to provide consultative and scientific support, and it elected Mr Martin Hellwig as Chair, and Mr Jean-Charles Rochet and Mr André Sapir as Vice-Chairs of the ASC.
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Euro symbols ©Thinkstock.com
EUR 4.6 billion bond issued to assist Ireland and Romania

On 17 March, the European Commission placed a EUR 4.6 billion bond issue on behalf of the European Union (EU). The proceeds will be on-lent to Ireland and Romania. Ireland will receive EUR 3.4 billion under the European Financial Stabilisation Mechanism (EFSM) and Romania EUR 1.2 billion under the Balance of Payments (BoP) facility. This new EUR 4.6 billion benchmark matures on 4 April 2018, was priced at mid-swaps + 8 basis points and pays a coupon of 3.250%. This compares very favourably with bonds of comparable issuers. Investor interest was again very strong. The Commission considers that the successful placement is a sign of continued confidence in the stability measures set up by the EU for dealing with the crisis and it confirms the role of the EU as a prime issuer. The EU is rated Aaa/AAA/AAA by Moody's, S&P and Fitch.
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Estonia and the euro © Thinkstock.com
Commission Communication analyses smooth euro changeover in Estonia

A Communication adopted by the Commission on 22 March presents the most important aspects of the euro changeover in Estonia and draws some conclusions for future changeovers in other Member States. Estonia followed a big-bang approach, whereby the adoption of the euro and the cash changeover took place at the same time. A two-week dual circulation period allowed for the gradual phasing out of banknotes and coins in the previous national currency. Banks, businesses and citizens in Estonia were well supplied with euro cash in advance of the changeover day, while the dual display of prices and the ‘Fair Pricing Agreement’ helped to prevent price abuses and misperceptions. According to the recent Commission Flash Eurobarometer survey, a large majority of Estonians (87%) perceived the changeover as smooth and efficient. "The examination of all available information shows that this was a very well prepared and implemented changeover. I congratulate Estonia on this success and I invite future euro-area Member States to learn from the experience", said Olli Rehn, European Commissioner for Economic and Monetary Affairs.
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Publications
Publication © European Commission

Key indicators for the euro area
This set of tables and graphs presents the most relevant economic statistics concerning the euro area. Each table is accompanied by a commentary. The document is intended to contribute to the analysis of recent developments in the euro area. It will be updated before each Eurogroup meeting of the ECOFIN ministers.
Measuring Euro Area Monetary Policy Transmission in a Structural Dynamic Factor Model, Economic Paper 441
Upcoming: Labour market review 2010
Upcoming: Quarterly report on the euro area
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Agenda Calls
24-25 March
Brussels
European Council
11 April
Brussels
Conference on the Europe 2020 Project Bond Initiative
14-15 April
Washington, D.C.
G20 Ministerial meeting
16-17 April
Washington D.C.
Spring Meetings of the IMF and the World Bank Group
2 May
Brussels
Financial integration and stability. EC/ECB joint conference
13 May
European economic forecast, spring 2011
18 May
Brussels
BEF 2011 – The Brussels Economic Forum 2011
20-21 May
Astana, Kazakhstan
EBRD Annual Meeting and Business Forum
25-26 May
Paris
Road to recovery. OECD Forum
No calls available right now.
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Directorate-General for Economic and Financial Affairs