Category Archives: finance

Estonian European Semester to foster the Economic and Monetary Union

The strength of the EMU depends on the financial discipline. It is very important that the member states follow the rules we have already agreed upon for the EMU. It is also essential to use all of the opportunities afforded by coordination procedures,” said Minister Toomas Tõniste, Finance Minister of Estonia, in Tallinn.

Valdis Dombrovskis, European Commission Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, met with Minister Tõniste. Vice-President Dombrovskis and Minister Tõniste focused on the matters of deepening the Economic and Monetary Union (EMU), a topic that Estonia hopes to achieve good progress in during the Estonian Presidency of the Council of the European Union. They also discussed overall economic developments in the context of European Semester and Estonian performance.

“We should use this window of political and economic opportunity. This is a good moment to put in place the remaining elements of a well-functioning EMU,” said Valdis Dombrovskis at the meeting. “It is better than waiting for a new crisis to complete the work. The European Commission is taking the initiative in this discussion: certain options were outlined in a reflection paper in May; President Juncker elaborated on some of these ideas in his State of the Union speech last month; and we will come with specific proposals on the 6th of December”.

Minister Tõniste stressed that EMU plays an important part in strengthening the European finance sector and in harmonising member states’ economic development.

For economic developments in the context of European Semester and Estonian performance Finance Minister Toomas Tõniste said: “Estonia’s economic growth has gained speed due to the recovery in Europe. I also welcome increased business confidence and the pickup in investments that will allow rewards from the favourable developments in European markets. However, an accelerated growth rate should not lead to excessive increases in government expenditure.”

Vice-President Valdis Dombrovskis added that the Estonian economy is well on track. We see strong economic performance. Both the employment rate and the labour force participation are highest in 20 years. GDP growth is revised up to 4.3% for this year, according to government estimates. The Commission will issue its forecast next month, and we expect these to also point out a strong economic performance. However, in good times it is also important to maintain fiscal discipline in order to ensure stability in a long term”.

Minister Tõniste and Vice-President Dombrovskis discussed how Estonia could hold on to its economic momentum. They also focused on how Estonia could achieve good progress with EMU during the last months of its Presidency. As Banking Union is of the cornerstones of the EMU, Estonia hopes to reach to Council’s general approach on the risk reduction package by the end of the year. This would allow proceeding with the negotiations of the European deposit insurance scheme (EDIS).

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EU new venture capital rules

The new rules will help diversify the funding sources available for businesses and long-term projects in Europe“, said Toomas Tõniste, minister for finance of Estonia, which currently holds the Council presidency. “By making it easier for them to raise money on capital markets, the aim is that businesses should not rely exclusively on bank loans.”

The Council adopted new venture capital rules aimed at boosting investment in start-ups and innovation.

The regulation is part of the EU’s plan to develop a fully functioning capital markets union. It will also help boost investment, in line with the EU’s ‘investment plan for Europe’.

The regulation was adopted at a meeting of the Agriculture and Fisheries Council, without discussion.

The European Parliament gave its approval on 14 September 2017. This follows an agreement with Parliament representatives reached on 30 May 2017.

Remarks by Jeroen Dijsselbloem following the Eurogroup meeting

Welcome to this Eurogroup press conference. We had a short meting today in the Eurogroup. First of all, I want to thank the Estonian Presidency of course for their hospitality and for allowing us to be in this very inspiring surroundings.

Let me first make a remark on the ongoing economic recovery. I’m not sure whether we should even talk about recovery anymore. In the Eurozone, growth keeps picking up, it is set to remain robust, it’s broad-based, it’s across all our countries. Of course, risks remain and work needs to be done to deal with those risks, but confidence is ever increasing and I think that’s hugely welcome.

 

We started our first meeting after the summer break with a discussion  on how to make our monetary union more resilient, which is vital for its sound functioning. The discussion took place about what is the responsibility of member states and what is the responsibility of the monetary union or the European Union, and I think reducing vulnerability. There are 3 aspects regarding resilience. First of all, of course, how we can make sure that we are less vulnerable to economic shocks. Secondly, how we can increase the absorption capacity. So this is how when the economic shock occurs, how it is being dealt with, absorbed, by institutions, by markets, by households, by companies. And thirdly, about enabling a faster economic recovery after a shock. And that, of course, is one of the lessons learnt from the crisis. We were much too slow in absorbing the shocks. We weren’t ready and fit to absorb the shocks, neither on the private nor on the public side, and it took a very long time to recover. Certainly, if you compare for example to how the US recovered from the crisis. So the three phases: reducing vulnerability before the shocks, absorption of the shock when it occurs, and having a fast recovery after the shock. Those were the elements discussed.

It is of course an umbrella issue, because when you get into it, it is again about the kind of structural reforms needed at national level, finishing the banking union, completing capital markets union so markets can absorb more shocks, improving our governance and institutional frameworks, both national and European. Many of those topics we will also return to today, tomorrow, in the coming months when we discuss the future of the monetary union.

So we will build on today’s discussion, bringing the topics back on our agenda in the coming weeks, putting it in the work programme of the Eurogroup, and start work this autumn on topics that are right in front of us, like finishing the banking union – the Commission already has proposals on the table -, doing more work on the capital markets union where proposals are on the table, while we discussed the future elements of the monetary union.

Second topic today was the state of play in Greece, the planning for the third review in Greece.

We got a report from the institutions on topics that are being worked on at the moment. Technical teams are at the moment in Athens, fact-finding and preparing the grounds, so that later on the third review can get off to a quick start. The idea is to finish that before the end of the year. More work needs to be done of course on a number of issues some of which were already mentioned today.

A sign that Greece has come a long way is the proposal to abrogate the excessive deficit procedure, which we welcomed today and is expected to be adopted by the Council later this month.

We also addressed ongoing court cases against the previous director of Elstat. Let me underline here again that, across the room in the Eurogroup, great concern was expressed about the ongoing court cases, the effect that it has internationally on the confidence in Greece and the process of modernisation in Greece, including the independence, of course, of Elstat itself. That concern was underlined and stressed. But of course the judicial procedures will go their independent ways.

Eurogroup: focus on Greece and economic resilience

Greece

Greece’s Minister for Finance, Euclid Tsakalotos, and the institutions (the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund) briefed the Eurogroup on the state of play of Greece’s ongoing economic adjustment programme.

They presented the expected timeline of the recently started third review of the programme. Greece will be required to complete some 95 actions, many of which concern the implementation of legislation that was adopted earlier during the programme.

Topics that will be covered in the third review include Greece’s budget for 2018, the review of social benefitslabour market reform, public administration-related matters, implementation of strategy for non-performing loans, energysector reform, and privatisation.

Economic resilience in the EMU

Ministers exchanged views on how to increase economic resilience in the Economic and Monetary Union.

They identified a number of policy areas, where improvements could lead to increased economic resilience. These include the need for the diversification of the economy, the flexibility of labour and product markets, taxation incentives for investment, quality of institutions, and other areas.

This initial discussion will guide the Eurogroup’s more concrete thematic discussions on growth and jobs in the future.

Economic resilience refers to a country’s ability to prevent and address economic shocks. It is particularly important for the euro area, where countries share a single currency and are highly interdependent, and where a lack of economic resilience in one country may rapidly lead to serious consequences in other euro area economies.

Draghi: openess is a key ingredient to raise productivity

ECB’s Mario Draghi was speaking at the annual central bankers’ meeting in Jackson Hole, Wyoming.

Openess is a key ingredient for raising productivity in the global economy. Multilateral cooperation is therefore crucial in responding to concerns about fairness,safety and equality.” Explained the President of the ECB.

The global recovery is improving, but like an increasing number of financial and business leaders, Mr. Draghi warned about demographic challenges to growth.

“The global recovery is firming websiteup,” Draghi said. He noted that in Europe and Japan, “the consolidation of the recovery is at an earlier stage” versus that of the U.S.

EU action to fight 10 years of financial crisis

“Thanks to the determined policy response to the crisis the EU economy is now firmly recovering and the Economic and Monetary Union is stronger than before. We need to build on this progress, completing the financial union, reforming our economies to foster convergence, inclusiveness and resilience, and maintaining sustainable public finances. In doing so, we should pursue a balanced approach where risk reduction and risk sharing go hand-in-hand and the unity of the single market is preserved.” Said Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue.

The global financial crisis began 10 years ago and led to the European Union’s worst recession in its six-decade history. The crisis did not start in Europe but EU institutions and Member States needed to act resolutely to counter its impact and address the shortcomings of the initial set-up of the Economic and Monetary Union. Decisive action has paid off: today, the EU economy is expanding for the fifth year in a row. Recent economic developments are encouraging but a lot remains to be done to overcome the legacy of the crisis years. The European Commission is fully mobilised to deliver on its agenda for jobs, growth and social fairness.

Commissioner Pierre Moscovici, responsible for Economic Affairs, Taxation and Customs, said: “Ten years after the global crisis began, the recovery of the European economy has firmed and broadened. We must use this positive momentum to complete the reform of our Economic and Monetary Union. Not all legacies from the past correct automatically. We have seen greater social and economic divergences develop in and among Member States. It is essential that our work going forward contributes to the real and sustained convergence of our economies.”

EU promote sustainable finance for sustainable investment

The Commission is hosting a major event to explore how best to use finance to promote sustainable investments and facilitate the transition to a low-carbon economy within the context of the Capital Markets Union.

This is part of the European Union’s efforts to turn climate change, environmental and sustainable policy goals into tangible results. The EU is taking the lead in this area and needs to develop an overarching strategy to better align capital flows with a pathway to sustainable development and growth. That is why the European Commission established at the end of 2016 the High-Level Expert Group on Sustainable Finance as part of its commitment to the Paris Climate Agreement and its work on Capital Markets Union. After six months of intensive work, the Expert Group summarised its first results and policy options in an interim report.  Today’s public hearing will give a wide range of participants the occasion to share their views on barriers to and possible solutions to ensure an increased uptake of sustainable finance.  Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union, opened the event in Brussels and Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, will give a keynote speech. The public hearing will be accompanied by the launch of a questionnaire by the High Level Expert Group.

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