Analytics, Banks, EU – Baltic States, Financial Services, Modern EU
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Thursday, 25.04.2024, 11:19
Financial crisis: a decade after…
Ten years ago,
i.e. on 9 August 2007, BNP Paribas
became the first major bank to acknowledge the impact of its exposure to
sub-prime mortgage markets in the United States, having to freeze exposed
funds.
In the years that
followed, the financial crisis turned into a banking crisis and a crisis of
sovereign debt, soon affecting the real economy. The European Union fell into
the worst recession in its history, which left deep marks on our citizens,
companies and the EU states’ economies.
However, the
European Commission concludes, European financial system gets back to recovery
thanks to decisive EU and member states’ actions.
Commission’s opinion
Vice-President Valdis
Dombrovskis, responsible for the Euro and Social Dialogue, underlined
that “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”.
However, he added “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”.
He concluded that in doing
so, the member states “should pursue a balanced approach where risk
reduction and risk sharing go hand-in-hand and the unity of the single market
is preserved”.
Another EU Commissioner,
Pierre Moscovici, responsible for economic affairs, underlined
that ten years after
the global crisis “we are witnessing the recovery of the European economy”.
He added that the member
states and the EU institutions must use this positive momentum to complete the
reform of the European Economic and Monetary Union.
He argued that “not all
legacies from the past could be corrected automatically; we have seen greater
social and economic divergences developed in a number of member states”.
He concluded that “it was essential
that our work going forward contributing to the real and sustained convergence
of our economies”.
Measures performed…
Both the EU
institutions and the member states took strong political decisions to contain
the crisis, preserve the integrity of the euro and to avoid worse possible
outcomes.
The EU has worked
in the following directions:
= to regulate the
financial sector and improve economic governance;
= to bolster new
and common institutional and legal frameworks;
= to establish a
financial firewall for the euro area;
= to support
countries in financial distress;
= to improve the member
states’ public finances;
= to pursue
structural reforms and encourage investment;
= to combat youth
unemployment;
= to improve
banking sector supervision;
= to increase the
ability of financial institutions to cope with future challenges; and
= to establish
ways to manage and better prevent possible crises.
As a result of
these actions, Europe's Economic and Monetary Union (EMU) has been
significantly overhauled and the European economy – and notably, the euro area
economy – is back in shape, said the Commission. The European recovery is
sustained and unemployment is steadily going down. The number of EU states
belonging to the euro has increased from 12 to 19 and the euro is now the
second-most important currency in the world.
Presently, the EU
economy is expanding for the fifth year in a row. Unemployment is at its lowest
since 2008, banks are stronger, investment is picking up, and public finances
are in better shape. 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.
Out of the eight
EU states that received financial assistance, only Greece is still under a
recovery programme and is due to exit it in mid-2018. Only three EU member states
are now subject to the corrective arm of the Stability and Growth Pact, the
so-called Excessive Deficit Procedure, down from 24 EU states at the height of
the crisis.
The Juncker
Plan, or Investment Plan for Europe, launched in November 2014, is
now set to trigger more than €225 billion across all EU member states.
However robust presently,
the EMU remains incomplete and the journey of the euro has just started. From
the Five Presidents' Report of June 2015 to the reflection paper on the
Deepening of the Economic and Monetary Union of May 2017, a lot of initiatives
were taken in recent years to draw the lessons from the crisis and prepare the
EU even better for future challenges.
More information
on the following websites: = Reflection
Paper on Deepening the Economic and Monetary Union; = The
Five Presidents' Report; = The
White Paper on the Future of Europe; = Reflection paper on the social
dimension of Europe; = Reflection paper on harnessing
globalisation.
Main source: http://europa.eu/rapid/press-release_IP-17-2401_en.htm?locale=en
Latvian version: http://europa.eu/rapid/press-release_IP-17-2401_lv.htm