Analytics, EU – Baltic States, Financial Services, Modern EU

Already by the end of June, the Commission will come up with a legislative proposal on a pan-European Personal Pensions product. Some progress has been made on the banking package, which was presented at the end of 2016 with the aim to reduce risk in the banking sector.  

Two important measures have been agreed on: first, the agreement on the bank creditor hierarchy, which will allow for larger banks to build robust buffers of bail-enable debt by establishing “common European asset class”. This will give more clarity to investors and help them to assess and price risk.

Second, the deal on transitional provision for the International Financing Reporting Standard 9 – or so called IFRS 9 – and certain large exposures. This will allow the alleviation of potentially negative impacts on banks.

New agreements send a good signal that the EU is advancing steadily on completing the regulatory framework for banks.

Semester and CSRs

Ecofin also discussed the European Semester and the Country Specific Recommendations where finance ministers broadly supported the Commission's proposal. Ministers agreed that the time is right to reform national economies to make them more resilient and strengthen economic growth.

As regards fiscal policies, Ministers supported Commission recommendation to abrogate the Excessive Deficit Procedures for Croatia and Portugal.

The overall picture of public finances continues to improve and with the abrogation of these two countries, only four EU states will continue to be subject of the excessive deficit procedure. To compare, in 2011 there were 23 EU states in the corrective arm of the Stability and Growth Pact.

As regards the preventive arm, there are 8 EU countries - Germany, Luxembourg, Malta, the Netherlands, Bulgaria, Czech Republic, Denmark, and Sweden – that are projected to be at or above their medium-term budgetary objectives both this year and next and correspondingly they receive no fiscal recommendations.

Unfortunately, some EU states are deviating from their budgetary objectives. That is why Italy, for example, had to take additional structural measures worth 0.2% of GDP this year.  

The Council agreed with the Commission’s recommendation to give warning to Romania on the existence of a significant observed deviation from the adjustment path towards the medium-term objective in 2016.

When it comes to the fiscal effort of other EU states not yet close to their Medium Term Budgetary Objectives, Commission welcomed ministers’ recognise both to strengthen the on-going recovery and to ensure the sustainability of public finances.

Commission also informed finance ministers about the good progress made in implementing the Action Plan for the fight against terrorism financing. There were two main strands of actions: how to further detect and prevent terrorist funding, and how to disrupt their sources of revenues.

Timely delivery of those proposals is the EU’s top priority in order to continue intensive work on this plan.

Reference: Speech in Luxembourg, 16 June 2017, web-link:

http://europa.eu/rapid/press-release_SPEECH-17-1654_en.htm?locale=en