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25 October 2013

European Council conclusions: EMU / Banking Union


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The European Council held an in-depth discussion on completing the EMU. It focused in particular on enhanced economic policy coordination, strengthening the social dimension of the EMU and completing the Banking Union.


III. Economic and Monetary Union

33. Following the December 2012 and June 2013 European Council meetings, the European Council has focused its discussion on Banking and Economic Union but will return to all issues in December 2013. This process builds on the EU's institutional framework, in full respect of the integrity of the single market, while ensuring a level playing-field between EU Member States, including via a fair balance between home and host Member States. It will be open and transparent towards Member States not using the single currency.

Strengthened economic policy coordination

34. Strengthening economic governance is an ongoing process in which significant progress has been achieved in recent years. The European Semester brings the elements together in an integrated process leading to the formulation of policy recommendations.

35. To promote strong, sustainable and inclusive economic growth in the euro area, the coordination of economic policies needs to be further strengthened, notably by increasing the level of commitment, ownership and implementation of economic policies and reforms in euro area Member States, underpinned by strong democratic legitimacy and accountability at the level at which decisions are taken and implemented.

36. The European Council underlines that closer coordination of economic policies should be focused on policy areas where positive effects on competitiveness, employment and the functioning of the EMU are most prominent.

As a first step, the European Council will make a shared analysis of the economic situation in the Member States and in the euro area as such. To this end, it will already hold a discussion in December following the publication of the Commission's Annual Growth Survey and the Alert Mechanism Report with the aim to agree, on the basis of the relevant indicators, on the main areas for coordination of economic policies and reforms.

This shared analysis will be based on an assessment of growth and job-enhancing policies and measures, including the performance of labour and product markets, the efficiency of the public sector, as well as research and innovation, education and vocational training, employment and social inclusion in the euro area.

The Commission will also provide a first overview of the implementation of country-specific recommendations that will be a basis for the further monitoring of their implementation.

Work will be carried forward to strengthen economic policy coordination, with the objective of taking decisions in December on the main features of contractual arrangements and of associated solidarity mechanisms. This would engage all Euro area Member States but non-euro area Member States may also choose to enter into similar arrangements. Any such measures must be fully compatible with the Single market in all aspects.

Social dimension of the EMU

37. The European Council welcomes the European Commission's Communication on the social dimension of the EMU as a positive step and restates the importance of employment and social developments within the European Semester. The use of an employment and social scoreboard in the Joint Employment Report and of employment and social indicators along the lines proposed by the Commission should be pursued, following appropriate work in the relevant Committees, for decision by the Council in December with the objective of using these new instruments as early as the 2014 European Semester. This wider range of indicators has the purpose of allowing a broader understanding on social developments.

38. The coordination of economic, employment and social policies will be further enhanced in line with existing procedures while fully respecting national competences. This requires more work to strengthen cooperation between the various Council configurations in order to ensure consistency of those policies in line with our common objectives.

39. The strengthened economic policy coordination and further measures to enhance the social dimension in the euro area are voluntary for those outside the single currency and will be fully compatible with the Single Market in all aspects.

40. Finally, the European Council underscores the importance of enhancing the social dialogue involving the social partners both at Member State and European level, in particular in the context of the European Semester, with the objective of enhancing the ownership of its conclusions and recommendations across the Union.

Banking Union

41. The European Council has been actively steering the process of establishing the Banking Union. It welcomes the final adoption by the Council of the Single Supervisory Mechanism and the European Banking Authority (EBA) Amending Regulations. This represents a decisive step towards the Banking Union. The European Council reiterates the principle of non-discrimination of Member States regarding banking supervision and resolution as stated by the European Council in October 2012 and reconfirms the agreed new voting arrangements in the EBA regulation for these matters, which is reflecting an appropriate balance between the participating and non-participating Member States. The European Council also reconfirms its agreement that the review on the operation of the voting arrangements will take place from the date on which the number of non-participating Member States reaches four.

42. The Single Supervisory Mechanism is the first step towards the Banking Union. In November, the European Central Bank will launch a comprehensive assessment of the credit institutions of the Member States participating in the Single Supervisory Mechanism in line with the Regulation conferring specific tasks on the European Central Bank. This will be followed by a stress test of banks across the EU. The European Council considers that this exercise is key to reinforce confidence in the EU banking sector and to restore normal lending conditions to firms and households. The European Council expects full support and cooperation by the national authorities to ensure complete transparency and a rigorous approach, which is key for the credibility of the exercise.

43. In this context, the European Council recalls the urgency, for the Member States taking part in the Single Supervisory Mechanism, of establishing a coordinated European approach in preparation for the comprehensive assessment of credit institutions by the European Central Bank. Member States should make all appropriate arrangements, including national backstops, applying state aid rules. European instruments are available according to their agreed rules. The European Council asks the Council to develop this approach as a matter of urgency and to communicate it by the end of November, in line with the goal that the European Central Bank completes the comprehensive assessment of credit institutions in a timely manner.

It also calls on the Eurogroup to finalise guidelines for European Stability Mechanism direct recapitalisation so that the European Stability Mechanism can have the possibility to recapitalise banks directly, following the establishment of the Single Supervisory Mechanism.

44. Completing the Banking Union is urgent and requires not only a Single Supervisory Mechanism but also a Single Resolution Mechanism. The European Council calls on the legislators to adopt the Bank Recovery and Resolution Directive and the Deposit Guarantee Directive by the end of the year. The European Council underlines the need to align the Single Resolution Mechanism and the Bank Recovery and Resolution Directive as finally adopted. It also underlines the commitment to reach a general approach by the Council on the Commission's proposal for a Single Resolution Mechanism by the end of the year in order to allow for its adoption before the end of the current legislative period.

Full conclusions

Further Council information (links to speeches, etc.)



© European Council


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