Subscribe free of charge to ECFIN e-news Keep up-to-date. Get breaking news and in-depth coverage of EU economic and financial news. Eurogroup approves second Greek adjustment programme EU finance ministers ask Hungary to take steps to correct deficit Commission demands clarification from Hungary on measures affecting the independence of the Hungarian Central Bank Task Force for Greece sees improved absorption and effectiveness of EU cohesion policy funding Conference on fiscal policy after the crisis sees fiscal union as key solution Successfully completed EU Balance-of-Payments assistance and Latvia's own reforms laid foundations of success, ECFIN seminar concludes Commission acts to increase the safety and efficiency of securities settlement in Europe Eurogroup approves second Greek adjustment programme On 14 March, euro area finance ministers approved financing of the second Greek adjustment programme for an amount of up to EUR 130billion until 2014. The disbursement of the euro area's contribution to financing can proceed as planned. Euro area Member States also authorised the EFSF to release the first instalment of a total amount of EUR 39.4 billion, which will be disbursed in several tranches. The finance ministers noted the assessment of the Troika that Greece has implemented all agreed prior actions in a satisfactory manner, and reiterated the importance of further strengthening Greece’s institutional capacity. The ministers also based their decisions on the results of the debt sustainability analysis provided jointly by the Commission, the IMF and the ECB. The high private sector involvement (PSI) in Greece's debt exchange offer will make a significant contribution to improving Greece's debt sustainability. Out of a total of EUR 205.6 billion in bonds eligible for the exchange offer, approximately EUR 197 billion, or 95.7 percent have been exchanged. Following the successful completion of the PSI operation on 8 March 2012, the exchange of bonds started on 12 March. This second programme is the corner stone of our efforts to boost sustainable growth and jobs in Greece; it is a unique opportunity not to miss. Furthermore, the success of this programme is a cornerstone of our comprehensive response to the current crisis. Olli Rehn, European Commission Vice-President and Commissioner for Economic and Monetary Affairs and the Euro EU finance ministers ask Hungary to take steps to correct deficit Based on a Commission recommendation, EU finance ministers have adopted a Council Recommendation asking Hungary to take steps to correct its excessive deficit in a sustainable and credible manner by mid-September 2012. The recommendation under Article 126(7) was adopted at the Economic and Financial Affairs (ECOFIN) Council meeting on 13 March. Hungary is being asked to make an additional fiscal effort to meet the government's own deficit target of 2.5% of GDP in 2012 and to ensure that the deficit in 2013 remains well below the 3% threshold, even after the phasing-out of one-off measures. As a consequence of Hungary's actions to date being deemed insufficient, the Council suspended EUR 495.2 million in EU Cohesion Fund commitments for Hungary, representing 0.5% of the country’s GDP and 29% of its cohesion fund allocations for 2013. However, the Council agreed to take this matter up again on 22 June and lift the suspension in case Hungary has put in place the requested corrective measures. Commission demands clarification from Hungary on measures affecting the independence of the Hungarian Central Bank Following the launch on 17 January of accelerated infringement proceedings against Hungary, the Commission on 7 March took further legal steps on measures related to Hungary’s infringements of EU law. While noting that progress had been made in the area of the independence of the central bank more than in other areas, the Commission sent an administrative letter demanding further clarification. The Commission asked Hungary to confirm that it would stop the practice of systematically issuing official press releases that criticize monetary policy decisions taken by the Hungarian Central Bank. Hungary was also asked to inform the Commission and the ECB on the new procedural steps it intends to take in order to consult the ECB in a systematic and timely way on any draft legislation in its field of competence, including the draft law on the new commitments. The Commission noted that the salary scheme applied to the Governor of the Central Bank is being used as a tool to exercise pressure on the Central Bank and constitutes a breach of the independence of the Central Bank. Task Force for Greece sees improved absorption and effectiveness of EU cohesion policy funding The Commission's Task Force for Greece presented its second report on the EU support to Greece on 15 March. The role of the task force, created by President Barroso on 20 July 2011 under the responsibility of Horst Reichenbach, is to provide technical assistance to Greece to help the country implement its challenging reform agenda to return to growth and job creation. In line with the programmes agreed between Greece, the EU and the IMF, this role has become even more crucial with the approval of the second adjustment programme for Greece. The second report describes progress made in accelerating Greece's absorption capacity of EU funds above EU average and in setting up and implementing technical assistance to Greece in nine key areas with the support of around twenty EU countries, the Commission and the IMF. Conference on fiscal policy after the crisis sees fiscal union as key solution Economists who recently contributed to new developments in fiscal policy gathered at the ECFIN conference “Fiscal policy in the aftermath of the financial crisis” on 2 and 3 March in Brussels. One of the keynote speakers, Nobel Laureate Chris Sims, nicely summarised the main policy conclusion: a fiscally integrated Europe forms the key part of the solution to the euro area’s current woes. Sims argued that monetary union coupled with a central fiscal authority could bring large advantages for the EU. However, one should not underestimate the political difficulties in taking such bold and complex decisions. A true fiscal union would require some kind of euro-wide tax instrument and the creation of euro bonds. Successfully completed EU Balance-of-Payments assistance and Latvia's own reforms laid foundations of success, ECFIN seminar concludes With the successful completion of its EU balance-of-payments assistance programme and other reforms, Latvia has regained the favour of financial markets, although challenges remain. At a well-attended Bank of Latvia and ECFIN seminar on 1 March in Brussels, speakers stressed that Latvia was right not to rely on currency devaluation as a solution to its problems. The crisis was caused by a sudden reversal of previously strong capital inflows, excessive internal demand, and imprudent budgetary policies rather than by a mere loss of price competitiveness. Fast fiscal consolidation and determined structural reforms, therefore, positively influenced growth via strengthened confidence and supply side effects. Commission acts to increase the safety and efficiency of securities settlement in Europe As part of its ongoing efforts to create a sounder financial system, the European Commission has proposed to set up a European common regulatory framework for the institutions, called Central Securities Depositories (CSDs), that are responsible for securities settlement. The proposal, which was issued on 7 March, will bring more safety and efficiency to securities settlement in Europe. It also seeks to shorten the time it takes for securities settlement and to minimise settlement fails. Settlement is an important process, which ensures the exchange of securities against cash following a securities transaction. CSDs, however, are still regulated only at national level, and cross-border settlement is less safe and efficient than domestic settlement. The proposal now moves to the European Parliament and the Council for negotiation and adoption. Inflation forecasting and the crisis: assessing the impact on the performance of different forecasting models and methods, Economic Paper 451 This paper analyses how the financial and economic crisis has affected inflation forecasting in the euro area. It illustrates the time-sensitivity of models and gauges the impact of the crisis by repeating the comparative assessment over two different sample periods. The paper also compares the accuracy of different inflation forecasting models and methods. More specifically, three groups of inflation forecasting models (rules of thumb and benchmark models; autoregressive moving average (ARMA) models; autoregressive distributed lag (ADL) models) are evaluated under a direct and an indirect approach. Under the former, the models directly forecast headline inflation, while under the latter, component-specific forecasts are generated first and subsequently aggregated to obtain an indirect forecast of headline inflation. Securities Transaction Taxes: Macroeconomic Implications in a General-Equilibrium Model, Economic Paper 450 No calls at this moment. 21-22 March Frankfurt, Germany ECB Governing Council and General Council meeting 29 March Brussels Eurogroup/ECOFIN meetings 30-31 March Brussels Eurogroup/Informal ECOFIN meetings 4 April Frankfurt, Germany ECB Governing Council meeting 17-20 April Strasbourg European Parliament Plenary 19 April Frankfurt, Germany ECB Governing Council meeting 20-22 April Washington IMF/World Bank Spring meetings 20-22 April Washington D.C. G20 Deputies’, Ministers’, and Central Banks Governors’ meetings 3 May Frankfurt, Germany ECB Governing Council meeting 11 May EU Economic forecasts, spring 2011 14-15 May Brussels Eurogroup/ECOFIN meetings   16 May Frankfurt, Germany ECB Governing Council and General Council meeting 18-19 May London EBRD Annual meeting and business forum 19-20 May Chicago G8 Summit 21-24 May Strasbourg European Parliament Plenary 30 May EU Convergence report 31 May Brussels BEF 2012 – The Brussels Economic Forum 2012 11-14 June Strasbourg European Parliament Plenary 18 June Brussels Eurogroup meeting 18-19 June Los Cabos, San Lucas, Mexico G20 Summit 22 June Brussels ECOFIN meeting 28-29 June Brussels European Council Directorate-General for Economic and Financial Affairs