Remarks by Mário Centeno following the Eurogroup meeting of 5 April 2019

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Thank you and good afternoon. First of all, let me thank the Romanian Presidency for hosting us here in Bucharest – a great hospitality.

Our meeting today was attended by a number of guests, including from the European Parliament, the SSM, the SRB, and the IMF. This reflects the wide range of important matters we are discussing. It also reflects my desire to reach out to key stakeholders in the Eurogroup’s policy debates, and this is all about openness.

We started by welcoming Roberto Gualtieri, the Chair of the European Parliament’s ECON Committee. We exchanged views with him on the euro area’s economic outlook and challenges. This was not the first time Roberto has been our guest in the Eurogroup. This exchange of views is valuable for both of us, as was noted by several ministers, and will continue.         

We then welcomed Andrea Enria and Elke König. Our hearing with the ECB Banking Supervision Chair is customary by now, but this was the first time for Andrea, in his new role. Elke debriefed us on the SRB’s ongoing activities and challenges.

We welcomed the increased resolvability and resilience of banks. We also welcomed the recent improvements to the EU anti-money laundering framework. Fighting money laundering and terrorist financing remains a top priority for the EU.

We encouraged both chairs to continue working together closely and we look forward to our next rendez-vous in November.

Next, we took stock of inflation and exchange rate developments based on the Commission and ECB assessments, which are broadly aligned. We do this in order to take a consistent message into G7, G20 and IMF meetings, which are approaching. Exchange rates have followed macroeconomic and policy developments. Regarding inflation, there is more of a question mark. In spite of policy support and labour market trends, pick-up in inflation has long been expected but not yet materialised.

Next, we discussed the Commission Opinion on the updated draft budgetary plan submitted by Luxembourg‘s new government. We welcome that it complies with the requirement of the preventive arm of the stability and growth pact.

On Greece, we discussed the implementation of the reform commitments based on the updated report on enhanced surveillance. This report is positive as it concludes that, at this stage, Greece has taken the necessary actions to deliver on its commitments.

We welcomed the adoption of the budget for 2019 in line with the commitments made under the programme and the completion of important structural reforms. We took note of the commitment of the Greek authorities to ensure that their newly-legislated scheme for the protection of primary residences is temporary and will be terminated by the end of 2019. We asked the institutions to monitor its fiscal and financial implications.

We encouraged the Greek authorities to continue the implementation of all key reforms adopted under the ESM programme.

Finally, on the basis of this assessment by the European institutions, we now expect the EWG and the EFSF Board of Directors to approve the two so-called policy contingent debt relief measures. This approval is subject to the completion of national procedures, which will now begin. These debt measures concern the transfer to Greece of profits made by the central banks on Greek government bonds (the so-called SMP and ANFA) and the reduction to zero of the step-up interest margin on certain EFSF loans. In cash this adds up to a grant of € 970 million Euros. It also sends investors a positive signal of continued ownership of the reform agenda in Greece, and you can see this already going on in the markets today.

Later on we welcomed the non-euro area members in the room to continue our discussions on deepening our economic and monetary union. Today we dealt with two main work streams – the Budgetary Instrument for Competitiveness and Convergence and EDIS.

On the budgetary instrument, last month we discussed expenditure. Today we discussed governance aspects and in May, our next meeting, we will discuss revenues. We should be ready to put all these elements together in time for the June summit.

Governance is critical. It’s about how we will run this tool, it is a political issue that also includes a technical and a legal dimension.

The 19 euro area Member States will have a strategic guidance role in this tool, but it will stay in the context of the MFF, the EU budget framework. The governance needs to reflect this complexity.

There is broad support on making appropriate links between the budgetary instrument and the European Semester, in particular via the euro area recommendations.

There is also broad support to codify this strategic guidance role for the euro area members. We will need to define the best legal way to do it. Some prefer an Inter-Governmental Agreement, others prefer to develop legal arrangements within the EU law. We will come back to this issue next month when we discuss revenues.

We aim to agree on the features of the new instrument and be able to report to the June summit.

Our last agenda point was on the European Deposit Insurance Scheme – also known as EDIS. The Chair of the High Level Working Group on EDIS informed us about the good progress in their discussions.

What we have asked this group to deliver is a credible path that can lead us to a fully functional Banking Union, which will include an efficient European depositor protection. There is more work to be done until our June deadline.

Finally, a gathering of euro area finance ministers on this date cannot ignore the developments regarding Brexit. We took stock of our level of preparedness. Leaders will discuss Brexit in the Special European Council on 10 April.

On our side, we prepared for all possible scenarios. This includes, of course, a “no-deal” Brexit. We have taken the necessary contingency measures and insisted on preparedness by market participants. Member States have prepared national contingency measures in financial services. Overall, European and national contingency measures cover all systemic activities in order to avoid cliff-edge effects. Nevertheless, such measures can neither replicate the benefit of EU membership nor compensate any lack of private players’ preparation. And, needless to say, we will want to avoid this scenario. Thank you.

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