Opening Statement of the ECOFIN President to the Economic and Monetary Affairs Committee of the European Parliament

20 December 2013, Last updated at, 11:53 EET
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Madam Chair, Honourable Members,

I am delighted to be back in front of your committee. I have greatly appreciated the professional and productive partnership that we have had over the last few months, our cooperation, and exchange of ideas. I hope we will continue to enjoy this partnership until Lithuania's Presidency is formally brought to a close. My team and I will be working to conclude as much business as possible before the Christmas break. As you know - we still have some important issues on the table.

These issues notwithstanding - the Lithuanian Presidency has made good progress on a number of files over the last six months. We have built on the solid foundations laid by you, the European Parliament, and our Irish predecessors. We have worked hard to achieve the consensus necessary to bring forward the necessary legislation to enable the changes that European citizens expect. The process has not always been easy, but we have pulled out all the stops to make progress on the Banking Union, and on broader financial services and taxation files. And in parallel - we have worked to efficiently implement newly established economic governance processes. Processes that I believe are critical to avoid future crises and to deliver a sustainable recovery across the EU.

Allow me to begin with the financial services legislative files.

As I stated in my appearance before your committee in July, work essential to completing the Banking Union was a number one priority for us. In this respect, I am delighted that just last week we were able to conclude an agreement in trialogue on the crucial Banking Recovery and Resolution Directive (BRRD). I hope - and fully expect - that the Council will be in a position to confirm this agreement shortly.

I believe this is a major breakthrough. Final agreement on BRRD is essential if we are to send a clear signal to the markets and European citizens that we are steadfast in our commitment to making our banking sector more resilient and serious about safeguarding the tax-payers money. This legislation will give us the tools to deal with banks in financial difficulty - effectively and efficiently. And it will help uphold the principle that those who have benefited from a bank's risk taking also bear the cost when things go wrong. A clear bail - in pecking order coming into force in January 2016 is vital in this regard.

We continue working with you to swiftly achieve an agreement on the Deposit Guarantee Schemes Directive (DGS). I sincerely hope our negotiating teams are able to reach a deal on DGS tonight for the sake of depositors across the EU. As we all agree - we must improve the protection of depositors' savings by improving the funding of Guarantee Schemes; broadening their coverage; speeding up pay-outs; and by improving the quality of information available to depositors.

Finally, ECOFIN Council's focus is now on reaching an agreement on the Single Resolution Mechanism (SRM). There is broad agreement that any compromise should enable efficient, effective and speedy resolutions. We made excellent progress during the last ECOFIN on 10 December and we remain acutely aware of the constraints posed by the European Parliament’s legislative term. The Lithuanian Presidency is committed to reaching a general approach to this key pillar of the Banking Union before the end of the year.

We will return to SRM at ECOFIN Council tomorrow when I hope we can iron out the key remaining issues. I am conscious there has been much speculation in the press on the possible nature of a final deal. But you will appreciate that, if I am to successfully and impartially conclude negotiations, - it would be unwise for me to comment on the details of the issues outstanding at this stage.

Turning to other important strands in the area of financial services, we have reached significant progress in the negotiations on Central Securities Depositories regulation (CSDR), on which we also secured a common Council position earlier, and on markets in financial instruments legislation (MiFID/MiFIR). Intensive work on these files is still on-going with a view of reaching an agreement by the end of our Presidency. I very much count on your support at jointly concluding on these important dossiers.

In the “gone but not forgotten” category, I am pleased that we were able to reach an agreement on the Omnibus 2 package. Solvency 2 framework, which is a part of Omnibus 2 package, will now come into force on 1st January 2016 and will streamline the supervision of insurance groups - while recognising the economic reality in which they operate. We have also been able to achieve the final adoption of the Mortgage Credit Directive. Therefore, at one fell-swoop - consumer protection has been enhanced and the internal market strengthened.

Also under my chairmanship of ECOFIN Council - a general approach was achieved on the Directive on Undertakings for Collective Investment in Transferable Securities (UCITS V). Suffice to say I hope that our work can be built upon to update the EU's regulatory framework in this area and introduce necessary rules regarding depositary functions, remuneration policies and sanctions.

The Lithuanian Presidency has also undertaken extensive work and achieved considerable progress on the Payment Accounts Directive (PAD) that will enhance consumer protection in the banking sector and remove the obstacles to a fully integrated internal market for retail banking. We are very close to successfully reaching a general approach that I hope can be confirmed on Friday.
Progress has also been made on anti-money laundering files.

In the field of Economic Governance, following the adoption of Country specific recommendations, due attention has been given to the aspects of closer monitoring and implementation of the recommendations - in this respect the ECOFIN Council contributed to the Presidency’s report on the “lessons learned” from this year’s European semester by offering tangible suggestions on how to further improve the process.

During our Presidency the euro area Member States for the first time have submitted their draft budgetary plans. This is a very important new element in the surveillance framework stemming from the two-pack. We facilitated the process in a way to allow all ECOFIN Ministers be informed about the results of this exercise.

We also took the opportunity at last week’s ECOFIN to examine for the first time the Commission’s analysis of the Economic Partnership Programmes that were presented by Member States under an Excessive Deficit Procedure. We adopted opinions on economic partnership programmes presented by Spain, France, Malta, the Netherlands and Slovenia - that describe policy measures and structural reforms that are planned to ensure an effective and lasting correction of their excessive deficits. This is an important work that helps to identify structural weaknesses and their linkage to government deficits. The implementation of these Economic Partnership Programmes will continue to be carefully monitored.

Last week ECOFIN Council also gave careful consideration to the Commission’s Annual Growth Survey and Alert Mechanism Report: the starting points of the upcoming European Semester and the Macro Imbalances Procedure. I can confirm the Commission’s analysis behind the EU’s suggested priorities for the coming twelve months is being carefully considered in all European capitals.

December European Council will discuss the Annual Growth Survey and the Alert Mechanism Report and aim to agree the main areas for coordination of economic policies and reforms. This latter aspect is foremost linked towards strengthening the functioning of Economic and Monetary Union. I am glad that ECOFIN was able to contribute to discussion on the elements of more effective EMU during our Presidency.

As far as AGS and AMR concerned, the Council will return to these reports in spring as Member States prepare their National Reform Programmes and Stability Convergence programmes.

Let me now say a few words on taxation policy, an area that has become extensively important as we seek to consolidate our public finances. ECOFIN Council has endorsed a report that will inform December European Council discussions on how best we tackle the issue of tax evasion and fraud. This sets out the progress made during the Lithuanian Presidency - while clearly outlining the work ahead.

We have given careful consideration to a new Commission proposal aiming at the automatic exchange of tax information between Member States on a broad range of sources of income. Seeking to avoid multiplication of standards, we have made sure the EU provides a coordinated input to the ongoing work of the OECD - aimed at developing a global standard for exchange of information. We have also intensified discussions in the Council on how best to stop tax bases being eroded or profits unduly shifted. Again - we are actively contributing as the EU to the ongoing work in the OECD on these matters.

Regrettably, despite the discussions at several ECOFIN meetings and strong support of the majority of Ministers, we have not been able yet to reach unanimous agreement on the revision of the Savings Taxation Directive, due to the reservations of two Member States. But I sense that we have a chance to move closer towards a consensus in the coming months. I hope closure can be found soon on this file at this would significantly improve the transparency to savings income.

As regards other tax dossiers I would like to note that the progress at technical level has been made on a number of files such as Common Consolidated Corporate Tax Base, Energy Taxation Directive and VAT on vouchers. Further work at technical level has been taken on Financial Transaction Tax.


Finally, let me also share with your committee, the delight on the timely adoption of the EU budget for 2014 during our Presidency. This adoption secured the necessary resources that will allow the start of the new programmes and the fulfilment of the commitments made in the past.

Also, the EU Council reached the agreement on Cohesion Policy 2014-2020 under the Lithuanian Presidency after more than two years of negotiations. These regulations open the way for new investment of more than 325 billion euros from the beginning of 2014 in all European Union. The vital engine of the EU economy, the SMEs, were also not forgotten - we facilitated discussions on the SME initiatives, including at informal ECOFIN in Vilnius.

Madam Chair, Honourable Members,

May I again thank this committee for constructive and productive cooperation. My staff and I have enjoyed working with you in safeguarding the interests of Europe and its citizens in such important area as economy and finance. I think that the priorities of Lithuanian Presidency - credible, growing, open Europe - which I had a chance to present to you in July, at the beginning of our Presidency, have been implemented: Europe became more credible, economic growth is recovering, and to my mind Europe became more open as well. The Presidency for us was a challenge and opportunity at the same time; from this experience I can conclude that we can achieve great results, if we work together.

I am grateful for your attention and I look forward to your questions.

17 December 2013

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