Euro area crisis management
Europe is fully aware of its responsibility in these difficult times. We, as the world's largest market, have to play a major
role in the global recovery.
Last week, we took major steps to overcome the crisis and ensure financial stability and we are determined to implement all the
elements of our comprehensive approach to ensure the stability of the Euro area.
Our strategy consists of five key elements :
First, a sufficient firewall against contagion. We have agreed to multiply up to fivefold the firepower of the European
Financial Stability Facility rescue fund. The leverage could be around 1 trillion Euro.
Second, a sustainable solution for Greece, comprising a substantial reduction of its debt with a voluntary contribution of
private creditors.
Third, regarding the European banking sector, we decided on a co-ordinated scheme to recapitalise banks across Europe.
Fourth, we have ensured further fiscal consolidation by those EU states that need more sustainable public finances and more
structural reforms.
Fifth, we have reformed and strengthened economic governance among the countries that form the Euro area: with far reaching new
measures for budgetary surveillance and economic policy coordination, and a political commitment to go beyond to strengthen the economic union, thereby achieving further convergence of policies
to promote growth and employment. We will strengthen the economic union to make it commensurate with the monetary union.
We are committed to implement all these measures very rapidly.
The Euro area stands ready to continue to support Greece, but Greece needs to stick to the agreed package of 26-27 October and
in particular to continue with the implementation of the EU/IMF programme. This needs to be crystal clear. We want Greece to remain in the Euro.
Given the dramatic domestic political and social situation, national and political unity in Greece is essential so that the hope
of a better future can be given to the Greek people. We trust their sense of responsibility.
The full implementation of the 26-27 October package and the support of the G20 will enable us to overcome the current
turmoil.
Global economic situation + G20 Action plan
The G20 faces again an important moment. Since the last G20 meeting in Seoul, the global economic recovery has weakened, while
imbalances remain. The financial market turmoil has intensified and global growth has slowed while unemployment is rising. Only with ambitious action by all, we will be able to generate new
growth and get the 200 million
unemployed worldwide back to work.
This outlook is true not only for Europe, but also for the United States and some emerging market economies. We all experience
difficulties, we all have to contribute to a solution.
Interdependence is today's reality. As in 2008, when the first G20 summit took place, we collectively face major challenges, and
international cooperation is the only way out to address them.
Measures to stimulate growth are an essential element of our strategy. In the end, only sustained economic growth can bring back
confidence, create jobs and absorb debts.
The EU's main contribution here is the above- mentioned package to ensure stability of the euro area. We are doing our homework.
However, having the Euro zone house in order is a necessary, but not a sufficient condition for global growth.
One should thereby not forget that the EU is not contributing to global imbalances: the EU has no large current account
deficits, continues to have low inflation, has generally lower debt levels than some of our major trading partners and the Eurozone has an exchange rate which is driven by market forces.
However, as the crisis is global, nobody can on its own bear the burden of a solution, neither the EU nor any other player.
Today the European Union will call on each and every member of the G20 to do its part.
We have stressed three points in the debate this afternoon :
First, advanced economies should fulfil their fiscal commitments taken last year at the G20 summits in Toronto and Seoul. They
are still valid.
Second, regarding the US: we are encouraged by its commitment on fiscal consolidation and we support efforts by the Obama
administration to implement its jobs plan.
Third, regarding emerging market economies and in particular China: we note their commitments on measures to rebalance their
domestic economy in the short term. This should be accompanied by greater exchange rate flexibility.
Beyond the current economic challenges, we will discuss important issues for sustainable and balanced growth in worldwide. The
main elements are :
1. reform on the International Monetary System
We will discuss the IMF instruments, including the creation of a new facility, and appropriate IMF resources. At the current
juncture, it is essential that the IMF is sufficiently equipped to address the current vulnerabilities and crisis situations wherever they occur.
2. financial regulation remains at the core of the G20 work.
A lot has to be done, but further work is needed, and we need to ensure that was has been decided is implemented effectively in
all countries. Again, Europe is doing its homework by implementing the Basle III rules swiftly and frontloading the efforts.
3. we will continue to develop the idea of a global financial transaction tax
4. collective action on common goods
The G20 agenda is more and more dealing with issues relevant for all our economies : social consequences of globalisation,
transparency of energy markets, volatility of agricultural prices, development of the poorest countries, fight against corruption, for example to oblige companies active and extractive industries
to disclose their payments . As far as climate change is concerned, Europe is delivering on the fast- track financing and has put in place binding targets in its domestic legislation.
5. global governance
Tonight we will look at the G20 itself, on the basis of a report produced by Prime Minister Cameron: how to structure its work
as the premier forum for international economic cooperation, how to enhance its legitimacy and its cooperation with other international organisations.
6. trade
Boosting Trade is crucial to support global growth. We will not reach a comprehensive global trade deal in the short term. This
is depriving the global economy of a significant source of growth and risk encouraging protectionist measures. We therefore call on our partners to engage in a real discussion on the priorities
of the WTO negotiations in 2012.
We have to continue our negotiations, but give it a fresh approach. This must include an active negotiating agenda, in
particular for least developed countries and broaden the scope of issues being to address new challenges.
To conclude, all the issues we will discuss are about the same fundamental question : How can we ensure a stable future for next
generations ?
