Trichet calls for speedy action on bail-out deal
Jean-Claude Trichet, the president of the European Central Bank, has urged member states of the eurozone to implement decisions made on 21 July as soon as possible to enable Greece to receive additional support.
Olli Rehn, the European commissioner for economic and monetary affairs, and Jean-Claude Juncker, the prime minister of Luxembourg who chairs meetings of eurozone finance ministers, also called for swift implementation of the summit agreement.
The three men were appearing before MEPs today (29 August) in an emergency debate organised by the European Parliament’s economic and monetary affairs committee.
The implementation of an agreement reached by eurozone leaders on 21 July has been held up by national parliaments taking summer breaks and opposition to a bilateral deal enabling Finland to receive collateral from Greece in return for its participation in the new €109 billion bail-out.
The three men also called for an agreement on the so-called ‘six-pack’ of legislative measures to enforce budgetary discipline and surveillance. The package is currently at a stalemate with member states refusing to compromise on the way in which possible sanctions would be approved. Rehn said that there needed to be an “urgent” agreement.
Trichet told MEPs: “We expect from governments strict respect for the principle of budgetary discipline and effective mutual surveillance.
“It is of utmost importance that these commitments are now implemented strictly and timely. They need to be backed by concrete measures.”
He said that this applies to both the bail-out programme for Greece and what he called “the renewed commitment” of eurozone member states to the agreed fiscal targets.
“The full and timely implementation of the 21 July agreement between heads of state or government is of essence in this respect,” he said.
Trichet told MEPs that, after beginning the purchasing of Spanish and Italian bonds earlier in August, the ECB had reduced its bond-buying last week.
In addition to the agreement to a second bail-out of Greece, member states also agreed to changes to the bail-out fund, the European Financial Stability Facility (EFSF), to allow it to buy bonds on the secondary market, taking the responsibility for doing so away from the ECB.
For his part, Rehn said that European Commission also wanted to see a swift implementation of the 21 July agreement.
He said: “We have called on the euro-area member states to accelerate the approval procedures for the implementation of these decisions, so as to make the EFSF enhancements operational very soon.”
Rehn said that the implementation was “very important in order to overcome the current crisis”.
“We are working very hard to get the 21 July agreement implemented swiftly. This is of particular importance in the current context of uncertainty and a certain slowing down of economic growth.”
He said he expected national governments to have completed the implement process by the end of September.
He added that the dispute surrounding the Finnish-Greek bilateral deal on collateral needed to be settled “very soon”.
“The Commission’s view is that any settlement needs to be legally sound and it has to be consistent with financing plans, private sector involvement and debt sustainability requirements.”
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Rehn emphasised that any agreement on collateral for Finland, or any other country, had to be approved by all eurozone member states.
Juncker said that he did not support Finland’s collateral demands, which were now being worked on by officials of eurozone member states. He said that there would be approval by the next meeting of eurozone finance ministers on 16 September.
Juncker said: “We are looking for another solution and you shouldn’t think that the collateral guarantee will stop us implementing the various elements of the 21 July decisions.”
As part of his address to MEPs, Rehn suggested that there needed to be changes to the way eurozone policies were decided, adding that there needed to be “more institutional clarity”.
“Especially, we need to reflect on how to improve the division of labour and respective responsibilities of the euro-area meetings in the composition of heads of state or government and of finance ministers, and how to improve the working methods of the eurogroup, including also its support structures and communication practices,” he said.
Juncker also voiced his concerns about communication, which some have blamed for contributing to turmoil on financial markets.
“The financial markets may not have been persuaded by what we’ve done, I think that’s probably true,” he said. “When it comes to communication, we’re not as good as we might be, but then I’m not entirely persuaded by the financial markets either.
“I think the political world is shockingly naive if they think that the financial markets are always right and we’re always wrong.”