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Eurogroup © The Council of the European Union Finance ministers agree on financial assistance to Portugal and nominate Mario Draghi to head ECB
- EU issues €4.75 billion bond to support Portugal
- Joint EC-ECB-IMF review mission to Ireland gives the country high marks
- Participants in fourth Private Sector Forum share knowledge on public support mechanisms for public-private partnerships
- Commission asks delinquent countries to implement latest bank capital requirements rules
- Design-a-coin competition to mark 10 years of euro cash
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Eurogroup © The Council of the European Union Finance ministers agree on financial assistance to Portugal and nominate Mario Draghi to head ECB

At their regular meeting on 16-17 May, European finance ministers agreed on financial assistance to Portugal. The EU will provide loans amounting to EUR 52 billion as part of a EUR 78 billion package of financial assistance, with EUR 26 billion each granted under the European Financial Stability Mechanism (EFSM) and European Financial Stability Facility respectively, and EUR 26 billion provided by the IMF. The aid will be provided on the basis of a three-year policy programme for the period up to mid-2014, which was negotiated with the Portuguese authorities by the Commission and the IMF, in liaison with the European Central Bank. A Memorandum of Understanding was signed on 17 May between the Commission and Portugal. It opens the way for the first disbursement of financial assistance.

Finance ministers also agreed on the nomination of Mario Draghi as President of the European Central Bank, to succeed Jean-Claude Trichet, whose term of office expires on 31 October. The European Council will decide on Draghi’s candidacy at its meeting in June.

Viewpoint
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Our main challenges now are to contain the sovereign debt crisis, and thus protect the ongoing recovery in the real economy, and improving employment.

Olli Rehn, Commissioner for Economic and Monetary Affairs
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Euros © Thinkstock.com
EU issues €4.75 billion bond to support Portugal

The European Commission, on behalf of the EU, issued a €4.75 billion bond on 25 May. The bond has a 5 year maturity and will fund a further disbursement of the assistance package to Portugal. The proceeds will be provided as a loan under the European Financial Stabilisation Mechanism (ESFM). The most recent bond issue follows a placement the day before of a €4.75 billion bond with a 10 year maturity, issued to support Ireland and Portugal. Disbursements to Ireland and Portugal from the two bond issues will be made next week, together with disbursements by the IMF, and will provide a comfortable liquidity situation in the two Member States in line with their respective country programme objectives.
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The Ha'penny bridge in Dublin © Thinkstock.com
Joint EC-ECB-IMF review mission to Ireland gives the country high marks

Staff teams from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF) visited Dublin from 5-15 April to assess Ireland’s progress in fulfilling the policy conditions under its EU/IMF financial assistance programme, the country’s economic outlook, and remaining policy challenges. The mission found that the economy is rebalancing away from domestic demand and towards net exports, in line with programme expectations. Except for a minor downward revision in the growth forecast for 2011, the macroeconomic conditions mandated by the programme have been maintained. Moreover, programme implementation has been strong: fiscal targets have been met or are on track to be met, a comprehensive strategy to recapitalize, restructure, and de-leverage domestic banks has been developed based on thorough stress-tests, and steps have been taken towards the programme's structural reform objectives.
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Joint EC-EPEC Private Sector Forum: Public Support Mechanisms for PPPs © European Commission, 2011
Participants in fourth Private Sector Forum share knowledge on public support mechanisms for public-private partnerships

The Private Sector Forum was held on 17 May in Brussels. The Forum was the fourth in a series of meetings arranged by the European Commission and the European PPP (Public-Private Partnership) Expertise Centre (EPEC). It gathered experts from European Institutions and the public and private sectors. The purpose of these semi-annual meetings is to promote the transfer of expertise and experience on recent aspects of PPP. The main topic of the most recent Forum was: "Public Support Mechanisms for PPPs". It was attended by more than 100 experts and hosted by the European Economic and Social Committee. Matthias Kollatz-Ahnen, Vice-President of the European Investment Bank and Gerassimos Thomas, Director for Finance for DG ECFIN delivered keynote speeches, and EPEC presented its new paper on "State Guarantees".

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Bank sign on building © Thinkstock.com
Commission asks delinquent countries to implement latest bank capital requirements rules

On 19 May, the European Commission requested that Greece, Italy, Poland, Portugal, Slovenia and Spain notify it within two months of measures that they will take to implement rules concerning the capital adequacy and remuneration policies of financial institutions. The rules are laid down in the Third Capital Requirements Directive or CRD III, and the original deadline for their implementation was 1 January 2011. The Commission also asked Belgium, Luxembourg, Slovakia and Sweden to implement those parts of the Directive that they have so far failed to. The aim of the Directive is to ensure the financial soundness of banks and investment firms by curbing excessive and imprudent risk-taking. If the national authorities do not formally notify the Commission within two months of the measures they will take to implement CRD III, the Commission may refer the Member States concerned to the Court of Justice.

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Euro coin competition © Tipik G20 leaders in Seoul 2010 © G20 Seoul Summit - All rights reserved
Design-a-coin competition to mark 10 years of euro cash

Close to 1000 designs were submitted to the design-a-coin competition which celebrates 10 years of euro cash, marking the end of the first phase of the competition. The competition was open to euro-area citizens at least 12 years old as of the end of 2011. Their task: to design the commemorative 2-euro coin that all 17 euro-area Member States will issue in 2012 to mark the 10th anniversary of the 2002 introduction of euro banknotes and coins. A professional jury, including professional designers, will now select the five best designs on the basis of established criteria. The public will then vote on these designs from 6 to 24 June. This is the first time that the euro area has organised an open design competition on this scale, and it represents the third occasion that all euro-area Member States have joined together to issue a euro coin with the same shared design on the ‘national’ side.
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Publications
ECFIN Economic Briefs – “Did nominal exchange rate flexibility matter during the global recession? A Czech and Slovak case study”

Did nominal exchange rate flexibility matter during the global recession? A Czech and Slovak case study
This policy brief analyses the relative performance of the Czech and Slovak economies between the official confirmation of Slovakia's euro-area entry in mid-2008 and the end of 2010. The analysis suggests that both economies continued to evolve in a highly similar manner. Czech real exports, as well as manufacturing production and employment, performed somewhat better, especially during the peak of the crisis. However, Slovak and Czech export performance was basically identical in nominal euro terms. Moreover, Slovakia enjoyed a more stable local financial market situation and also benefited from looser monetary policy conditions in the euro area, which resulted in more favourable non-financial private sector credit developments.


Upcoming: Product market review
Upcoming: Labour market review 2010
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Agenda Calls
25-26 May
Paris
Road to recovery. OECD Forum
26-27 May
Deauville
G8 Summit
6-9 June
Strasbourg
European Parliament Plenary
22-23 June
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European Parliament Mini-plenary session
14-15 June
Brussels
Eurogroup/ECOFIN meetings
24 June
Brussels
European Council
11-12 July
Eurogroup/ECOFIN meetings
Internal Market. Public consultation "The EU corporate governance framework” (deadline: 22 July)
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