Newsroom

Story title ESM Board of Governors meeting 2013
Story description

The Annual Meeting of the Board of Governors of the European Stability Mechanism (ESM) takes place on 20 June 2013, in Luxembourg.

Video title Statement by Managing Director of the ESM
Video description

Statement by Klaus REGLING, Managing Director of the European Stability Mechanism (ESM) on 18 June 2013, in Luxembourg.

Reference 99522 Video infos Mpg4 / PAL - 16:9 Duration 00:03:56 Type News package
Shooting date 18-06-2013 Country Luxembourg Town Luxembourg    
TC Thumbnail Description
00:00:02

SOUNDBITE (English) Klaus REGLING, Managing Director of the European Stability Mechanism (ESM)

The Board of Governors is the top decision-making body of the ESM. It comprises the 17 Finance Ministers of the Euro area, they meet on a regular basis anyway as Eurogroup on a monthly basis but once a year they meet to look at the business activities of the ESM of the preceeding year and to approve the annual report.

Keywords : Regling | ESM | euro area | Board of governors | annual report Duration : 00:00:20

00:00:22

SOUNDBITE (English) Klaus REGLING, Managing Director of the European Stability Mechanism (ESM)

The EFSF supports the macro economic adjustment programs in Ireland, Portugal and Greece. The ESM, which was created in October 2012 supports the bank restructuring in Spain and the new Cyprus program. EFSF will come to an end, it will not provide new loans, new programs, but the ESM as a permanent institution has a total lending capacity of 500 billion Euros, so far the ESM has only used about 50 billion for Spain and Cyprus, so 90% or 450 billion euros are still left.

Keywords : Ireland | Greece | Portugal | Cyprus | Spain | EFSF | ESM Duration : 00:00:39

00:01:01

SOUNDBITE (English) Klaus REGLING, Managing Director of the European Stability Mechanism (ESM)

The interest costs from our Member States that borrow from EFSF/ESM are all calculated on the same basis and they reflect our funding costs and a very small margin for the administrative costs. The cost is low, we benefit from our very good rating in the markets, we can raise funds at very low rates, at the short end even negative sometimes, for the longer term bond issues we pay around 2%, 1.9% for 10 year government bonds, all these different maturities are then added up, we calculate on a daily basis the average cost of funding and these is directly passed on to the countries that borrowed from us.

Keywords : EFSF | ESM | bonds | interest rates Duration : 00:00:46

00:01:47

SOUNDBITE (English) Klaus REGLING, Managing Director of the European Stability Mechanism (ESM)

We know our Member States very well, before countries receive money the European Commission and the IMF make debt sustainability analysis to make sure that these countries are in a position to pay back and the most important aspect of our lending operation is that money is only given on conditionality, meaning that countries have to promise to improve their economic policies, implement structural reforms, have fiscal consolidation with the objective of improving the economic fundamentals so that a new basis for sustainable growth is created in each country.

Keywords : IMF | EFSF | ESM | European Commission | conditionality | sustainable growth Duration : 00:00:45

00:02:32

SOUNDBITE (English) Klaus REGLING, Managing Director of the European Stability Mechanism (ESM)

Banking union addresses our most serious problems at the moment. Banking union has several elements, the first one is decided, the ECB will take over the supervision of the largest and most important European banks, that's an important first step. Then there are other elements under discussion, one is the possibility for the ECB to recapitalize banks directly, this may be decided very soon but it will only become effective if and when the ECB is playing its full role as common supervisor. Other elements are a bank resolution mechanism, a bank resolution fund and also the harmonisation of deposit insurance schemes. These steps will take a bit longer, they are under discussion and we are waiting for proposals from the Commission. It is important because at the moment we see that the European banking market is fragmented, we have seen a re-nationalisation of banking and these is partly because the countries in southern Europe face a situation where borrowers have to pay significantly higher interest rates than comparable borrowers in northern Europe. This is a burden for real economic developments and the ECB is trying to improve the monetary transmission mechanism in order to bring this to an end.

Keywords : ECB | bank recapitalization | banking union | European banks | bank resolution fund | deposit insurance schemes Duration : 00:01:24

00:03:56

END

Duration : 00:00:00