Europaudvalget 2010-11 (1. samling)
EUU Alm.del Bilag 113
Offentligt
28 November 2010
Statement by the Eurogroup
The recent events have demonstrated that financial distress in one Member State can
rapidly threaten macro-financial stability of the EU as a whole through various
contagion channels. This is particularly true for the euro area where the economies,
and the financial sectors in particular, are closely intertwined.
Throughout the current crisis, euro area Member States have demonstrated their
determination to take decisive and coordinated action to safeguard financial stability in
the euro area as a whole, if needed and return growth to a sustainable path.
In particular, the European Financial Stability Facility (EFSF) has been set up to
provide for swift and effective liquidity assistance, together with the European
Financial Stabilisation Mechanism (EFSM) and the International Monetary Fund, and
on the basis of stringent programmes of economic and fiscal policy adjustments to be
implemented by the affected Member State and ensuring debt sustainability.
On 28 - 29 October the European Council agreed on the need to set up a permanent
crisis mechanism to safeguard the financial stability of the euro area as a whole.
Eurogroup Ministers agreed that this European Stability Mechanism (ESM) will be
based on the European Financial Stability Facility capable of providing financial
assistance packages to euro area Member States under strict conditionality functioning
according to the rules of the current EFSF.
The ESM will complement the new framework of reinforced economic governance,
aiming at an effective and rigorous economic surveillance, which will focus on
prevention and will substantially reduce the probability of a crisis arising in the future.
1
 PDF to HTML - Convert PDF files to HTML files
Rules will be adapted to provide for a case by case participation of private sector
creditors, fully consistent with IMF policies. In all cases, in order to protect taxpayers'
money, and to send a clear signal to private creditors that their claims are subordinated
to those of the official sector, an ESM loan will enjoy preferred creditor status, junior
only to the IMF loan.
Assistance provided to a euro area Member State will be based on a stringent
programme of economic and fiscal adjustment and on a rigorous debt sustainability
analysis conducted by the European Commission and the IMF, in liaison with the
ECB.
On this basis, the Eurogroup Ministers will take a unanimous decision on providing
assistance.
For countries considered solvent, on the basis of the debt sustainability analysis
conducted by the Commission and the IMF, in liaison with the ECB, the private sector
creditors would be encouraged to maintain their exposure according to international
rules and fully in line with the IMF practices. In the unexpected event that a country
would appear to be insolvent , the Member State has to negotiate a comprehensive
restructuring plan with its private sector creditors, in line with IMF practices with a
view to restoring debt sustainability. If debt sustainability can be reached through
these measures, the ESM may provide liquidity assistance.
In order to facilitate this process, standardized and identical collective action clauses
(CACs) will be included, in such a way as to preserve market liquidity, in the terms
and conditions of all new euro area government bonds starting in June 2013. Those
CACs would be consistent with those common under UK and US law after the G10
report on CACs, including aggregation clauses allowing all debt securities issued by a
Member State to be considered together in negotiations. This would enable the
creditors to pass a qualified majority decision agreeing a legally binding change to the
terms of payment (standstill, extension of the maturity, interest-rate cut and/or haircut)
in the event that the debtor is unable to pay.
2
 PDF to HTML - Convert PDF files to HTML files
Member States will strive to lengthen the maturities of their new bond emissions in the
medium-term to avoid refinancing peaks.
The overall effectiveness of this framework will be evaluated in 2016 by the
Commission, in liaison with the ECB.
We restate that any private sector involvement based on these terms and conditions
would not be effective before mid-2013.
President of the European Council Herman Van Rompuy has indicated that his
proposal on limited Treaty change to the European Council at its next meeting will
reflect today's decision.
3