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European leaders agree timetable for the Single Supervisory Mechanism (SSM)
European leaders have agreed on a timetable for the SSM as a first pillar of the future European banking union. During the European Council meeting on 18-19 October, leaders agreed that priority should be given to work on legislative proposals for the Single Supervisory Mechanism (SSM). They invited the legislators to proceed with the work on the proposals as a matter of priority, with the objective of agreeing on the legislative framework by 1 January 2013, and to make the SSM fully operational in the course of 2013. The SSM will cover at least all banks in the euro area. Ultimate responsibility for specific supervisory tasks will lie with the European Central Bank (ECB). National supervisors will continue to play an important role in day-to-day supervision and in preparing and implementing ECB decisions. The leaders also agreed that once an effective SSM is established, the European Stability Mechanism (ESM) could, following a regular decision, have the possibility to recapitalise euro area banks directly. In other business, the European Council invited the legislators to reach agreement on the “two-pack” by the end of 2012 at the latest. The proposals are designed to further strengthen Commission surveillance of national budgetary and economic policy, improve economic policy coordination, and align key concepts currently used under intergovernmental structures with the Treaty framework. Leaders also called for the rapid adoption of the pending proposals relating to the harmonisation of national resolution and deposit guarantee frameworks. Moreover, they called for the rapid conclusion of the single rulebook, including agreement on the proposals on bank capital requirements (Capital Requirements Regulation (CRR)/ Capital Requirements Directive IV (CRD IV) by the end of the year.
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To deliver lasting results, we need to develop a fully-equipped Community economic governance together with a genuine, credible fiscal capacity.”
José Manuel Barroso, President of the European Commission |
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Van Rompuy presents interim report “Towards a genuine EMU”
A strengthened Economic and Monetary Union (EMU) received further impetus with the presentation of the interim report “Towards a genuine EMU” by Herman Van Rompuy, President of the European Council, established in close cooperation with the Presidents of the Commission, the Eurogroup and the ECB. Van Rompuy presented the interim report during the European Council meeting on 18-19 October. The report includes avenues for improving the resilience of EMU as a whole, such as the idea that Member States could conclude individual contractual arrangements with the EU institutions on the reforms they commit to undertake. The Council agreed that a strengthened EMU should build on the EU's institutional and legal frameworks, remain open and transparent towards Member States outside the euro area and respect the integrity of the Single Market. Van Rompuy received the mandate to further explore avenues to strengthen EMU and present his specific conclusions and time-bound roadmap at the next European Council meeting in December.
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Commission 2013 Work Programme aims for sustainable growth
The Commission Work Programme 2013 (CWP), which was adopted on 23 October, sets out the Commission’s thinking and targeted actions for returning the EU to sustainable growth. It summarises the EU’s objectives in seven key areas – including a genuine Economic and Monetary Union (EMU), and the Single Market – and highlights what is missing today. It then explains how the Commission will tackle these objectives: by taking forward key initiatives already on the table, by making new proposals, and by ensuring that the benefits of reform are carried through to citizens by effective implementation. President Barroso said: "In my State of the Union address, I proposed a decisive deal for Europe. This involves huge change for Europe. But this Work Programme shows how the Commission is working day by day to take the steps needed. 2013 will be a crucial year for showing our citizens that the EU is leading the way in taking the credible, concrete steps needed to lead us out of the crisis and build the right springboard for future sustainable growth."
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Troika concludes Irish economic programme remains steadfast
Staff teams from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF), the "Troika", visited Dublin during 16–25 October 2012 for the eighth review of the government’s economic programme and also met with a variety of stakeholder groups. The Troika concluded that policy implementation remains steadfast despite the challenging external environment, helping Ireland to start to regain market access. It is expected that fiscal targets for 2012 will be met despite expenditure overruns in some areas, and the authorities are committed to the 2013 deficit ceiling of 7.5 percent of GDP. Banks remain well-capitalised and downsizing has progressed well, yet further efforts are needed to address their profitability and asset quality challenges. In line with the euro area summit conclusions of 29 June, EC/ECB/IMF teams continued to discuss with the authorities possible technical solutions to improve the sustainability of the well-performing adjustment programme.
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Commission proposes to authorise enhanced cooperation on a common Financial Transactions Tax
The 10 Member States that wish to apply an EU financial transaction tax (FTT) through enhanced cooperation should be allowed to do so, because all the legal conditions for such a move have been met. This is the conclusion of the proposal for a Council Decision that was adopted by the Commission on 23 October. According to the proposal, a common FTT would reinforce the Single Market, ensure a fairer contribution from the financial sector to the public purse, and make financial markets more efficient, by steering them away from casino-type trading to more stable activities that support the real economy.
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Task Force for Greece reaches one-year anniversary
More than one year has passed since the Task Force for Greece (TFGR) held its first high-level coordination meeting on 12 October 2011. That first meeting brought together around 100 representatives of the Greek administration, possible providers of technical assistance and European Commission services in Brussels, to coordinate the international support for structural reforms in Greece. Today, the Task Force with Horst Reichenbach as its Head, coordinates an extensive portfolio of technical assistance projects covering ten policy domains, and around twenty EU Member States are actively involved in providing technical assistance to Greece, including eight which have seconded experts from their national administrations to the Task Force based in Brussels and Athens. The TFGR was officially established by EC President Barroso on 20 July 2011, at the request of the Greek Prime Minister, with a mandate to identify and coordinate the technical assistance that Greece needs to deliver on commitments it has undertaken in its economic adjustment programmes. The Task Force works under the political guidance of Commission Vice President Olli Rehn.
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Commission Quarterly Report on the euro area examines a number of facets of the euro area adjustment challenge
The European Commission has released the autumn 2012 edition of the Quarterly Report on the euro area. This report series features concise research by Commission staff on economic and financial topics relating to the euro area. This edition, issued on 12 October, examines a number of facets of the euro area adjustment challenge. In its Focus section, it analyses external sustainability in euro-area countries. Some euro area Member States are reducing their current account deficits, while in others further adjustment – including structural reforms – is needed. Other chapters of the Quarterly Report examine issues regarding fiscal consolidation – such as whether consolidation can be ‘self-defeating’ – and the interaction between fiscal consolidation and labour market rigidities. A final chapter analyses the potential impact of a securities transaction tax, concluding that – in addition to generating additional tax revenue – it may also dampen financial sector volatility.
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Annual Meetings of the IMF and the World Bank discuss risks to global outlook
EC Vice-President Olli Rehn participated in the Annual Meetings of the International Monetary Fund (IMF) and the World Bank in Tokyo from 11-14 October. During the meetings of the International Monetary and Financial Committee (IMFC), discussion focused on global economic and financial market developments and the risks to the global outlook. There was broad agreement that currently the main risks come from remaining instability in the euro area, fiscal uncertainty in the US and slowing growth in major emerging economies. IMFC members agreed to continue to act cooperatively to break negative feedback loops and restore the global economy to a path of strong, sustainable and balanced growth. Rehn also participated in the Deauville Partnership Ministerial meeting and attended the G-7 meeting of Finance Ministers and Central Bank Governors.
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Exhibition increases knowledge on the euro in China
“The euro, a currency for Europe” is an exhibition in China that was launched in late 2011 and has, one year on, travelled to 10 different cities across China. It has been on display at several top universities and has been seen by around 34,000 students. The exhibition explains the history behind the euro, the current challenges and the EU’s strategy for dealing with the crisis. Marco Buti, Director-General for Economic and Financial Affairs at the European Commission, met with students at Fudan University, Shanghai, on 15 October 2012 where he explained the many measures taken to help vulnerable countries and create financial safety nets, to enhance growth through structural reforms, and to provide robust and integrated economic governance. Buti ended his presentation with an African proverb: “If you want to go fast, go alone. If you want to go far, go together.” The mission also allowed for a good exchange with Chinese investors at the working dinner at Pudong Club and with European colleagues in an event organised by the Chamber of Commerce, as well as at a bilateral meeting with the local branch of the People’s Bank of China, the Chinese central bank.
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New Commission rules enable ESMA to impose fines on credit rating agencies
The Commission published rules on 16 October that enable the European Securities and Markets Authority (ESMA) to impose fines on credit rating agencies (CRAs) when they breach EU legislation. In order to respond to the deficiencies in the credit rating sector that contributed to the financial crisis, a regulatory framework for credit rating agencies operating in the EU was established and ESMA was entrusted with the supervision of credit rating agencies. The new CRA Regulation includes a full list of infringements that, if committed by a credit rating agency, may trigger fines. These include conflicts of interest, obstacles to supervisory activities or non-disclosure of certain information.
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Tax reforms in EU Member States 2012 - Tax policy challenges for economic growth and fiscal sustainability. European Economy. June 2012.
Analysing recent trends in tax revenues and tax reforms in EU Member States, this year's report focuses on the EU’s VAT system and on the identification of tax policy challenges faced by EU Member States. The report analyses the welfare gains and economic benefits from simplifying VAT procedures and reviews options to reduce VAT fraud and evasion. It also identifies horizontal challenges that EU Member States are currently facing in the area of tax policy, such as fiscal consolidation on the revenue side and growth-friendly tax structures, the broadness of tax bases under both direct and indirect taxation, and the need to improve tax governance. The report also addresses specific tax issues, namely housing taxation, environmental taxation and some redistributive aspects of taxation.
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| Directorate-General for Economic and Financial Affairs |
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