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Spain/EU/banking union/Cyprus

Published on March 28, 2013
Statements by M. François Hollande, President of the Republic, at his joint press conference with Mr Mariano Rajoy, Prime Minister of Spain (excerpts)

Paris, March 26, 2013

(…)

EU/CYPRUS/BANKING UNION/GROWTH

THE PRESIDENT – We discussed the situation in Europe. Since last June – the European Council in June – we, Spain and France, have been working with the same determination: to ensure the goals of growth but also financial stability prevail. It was a very important European Council, whose effects we’re still seeing today. Our responsibility is to implement what we decided at that summit so that there can be important developments in Europe’s financial situation.

That’s what was done during the subsequent Councils, and that’s why we attach high value to banking union and to resolution, supervision and recapitalization mechanisms – along with deposit guarantees, which must be an absolute, irrevocable principle.

We want to move ahead with this banking union according to the timetable set. We’ve seen how useful it’s been in resolving the Cyprus situation. So we must regard the agreement reached between Cyprus and the Troika as being part of the process of banking union – with rules that must be as closely aligned as possible, even though the Cyprus situation is specific, unique and exceptional.

On the other goal we’re pursuing together: at the same time as we reduce our deficits and follow the path of restoring the public accounts, we’re determined to have growth. Europe must be stimulated in order to have a prospect of renewed growth, including in 2013. That’s the balance that should be struck: between the part that must be reserved for restoring the public accounts and the part that must be guaranteed for a return to growth.

If the part for restoring the public accounts is too high, there will be no return to growth. But if there’s no restoration of the public accounts, there will be no confidence for growth. So that’s the path we must find. It’s different depending on the country. In Spain, very major measures have been taken; in France, we weren’t in the same situation. (…)

DEPOSIT GUARANTEES/CYPRUS

Q. – The European Commission said today that deposits above €100,000 could be used in future plans to resolve banking crises. I’d like to know if you’re opposed to deposits being used in future. (…)

THE PRESIDENT – What is banking union? It’s what enables us to have oversight –so-called supervision of the banks. It’s what enables us to have a resolution if there’s a crisis. It’s guaranteeing deposits, through a recapitalization which will, as Mariano Rajoy has described, come at the end of the process, through the ESM [European Stability Mechanism] – that is, a solidarity fund at European level. (…)

People who put money into banks in the Euro Area have a guarantee of the funds deposited there. That’s a principle that must be respected, because it’s the principle that gives confidence and forms the basis of banking union. When there’s a crisis – as can happen when it hasn’t been dealt with soon enough – it’s resolved through the ESM mechanisms, via recapitalization. (…)

What’s very important with regard to Cyprus [is that] it’s an agreement that took time to be reached, because it wasn’t that simple, given the distinct identity of Cyprus, with an overdeveloped banking system in relation to the real economy and depositors who weren’t only European depositors from the Euro Area. It could be handled only in an exceptional, specific, unique way. But it nevertheless had to be done, and it was done, so that people with deposits of under €100,000 wouldn’t have anything deducted from their accounts. (…)

UNEMPLOYMENT

Q. – A question again on unemployment. The unemployment rate in France, we’ve learned this evening, is verging on the all-time record of 1997. (…)

In your view, does this justify adopting exceptional measures? Do you still envisage a reversal in the unemployment curve at the end of this year?

THE PRESIDENT – (…) We need growth in Europe. The bulk of our trade is carried out in European markets, and when Europe is in recession France can’t be in expansion, and no country can be, including the one that seems to be doing best, which will experience growth of barely 0.8% in 2013.

You ask me if I’m still convinced that we’re going to reverse the unemployment curve. It’s not about being convinced, it’s not simply a belief, it’s a determination, it’s a goal, and I’ll stick to it, with measures we’ve been taking throughout recent months, which will have an effect. But in order to be lasting, this reversal – which will come about only at the end of the year: that’s the commitment I’ve made – will have to be fuelled by growth. Hence the battle I’m waging at national level but also at European level, for this freturn to growth. (…)./.

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