In my capacity as President of EURIMF, I submit this Buff statement on the Article IV consultation with the euro area. It reflects the common view of the Member States of the euro area and the European Union in their respective fields of competence.
The authorities of the euro-area Member States are grateful for open and fruitful consultations with staff and for their constructive policy advice.
The authorities are in broad agreement with staff findings and recommendations. Particularly the agreement reached at the Euro Area summit on 29 June to establish an effective single supervisory mechanism, involving the ECB, following which the ESM could have the possibility to recapitalize banks directly, represents a decisive step towards breaking harmful feedback loops between banks and sovereigns, while recognizing the need for supervision and liability to go hand in hand. These proposals will be considered as a matter of urgency by the end of 2012. In the past months the areas of fiscal policy coordination and growth support have also seen further progress in completing the comprehensive response to tackle the root causes of the ongoing banking and debt crisis. New fiscal governance advances include Commission legislative proposals under the so-called ‘two pack’, which strengthen national fiscal frameworks, allow for closer fiscal surveillance and establish a suitable surveillance framework for programme countries and those facing financial stress. The Fiscal Compact agreed in March by euro area Member States and 8 other EU members will add further weight to the aim of establishing balanced budget rules enshrined in national legislation, and the first implementation of the ‘six-pack’ entered into force last December has been a broad success.
Growth policies are receiving further support through the “Compact for Growth and Jobs” agreed by the European Council of 28/29 June, which rests on the strong commitment of Member States to move forward on closer policy integration and to implement the country-specific recommendations on structural and fiscal policies as well as the Euro area recommendation formally agreed at the 10 July ECOFIN Council that have been issued as part of the European Semester. These concrete efforts and the clear trajectory that they establish towards a closer and more robust euro area should soon begin to reassure markets, which currently still remain fragile. The concrete advances made at the Euro Summit meeting of 29 June and the Eurogroup meeting on 9 July in matters of financial supervision and banking sector support for Spain mean that confidence continues to be built. The authorities reiterate their resolve to take all the necessary actions to preserve the integrity and stability of the euro area.