Text proposed by the Commission Amendments proposed by the ECB (2)

Amendment 1

Recital 1

‘1. The unprecedented global crisis that has hit the world over the last three years has seriously damaged economic growth and financial stability and provoked a strong deterioration in the government deficit and debt position of the Member States, leading a number of them to seek financial assistance outside the framework of the Union.’ ‘1. The unprecedented global crisis that has hit the world over the last three years has seriously damaged economic growth and financial stability and provoked a strong deterioration in the government deficit and debt position of the Member States, leading a number of them to seek financial assistance both within and outside the framework of the Union.’

Explanation Financial assistance was also provided by the European Financial Stabilisation Mechanism (EFSM), which is a Union instrument.

Amendment 2

Recital 4

‘4. A Member State whose currency is the euro should be subject to enhanced surveillance when it is experiencing — or at risk of experiencing — severe financial disturbance, with a view to ensuring its swift return to a normal situation and to protecting the other euro area Member States against possible negative spillover effects. This enhanced surveillance should include a wider access to the information needed for a close monitoring of the economic, fiscal and financial situation and a regular reporting to the Economic and Financial Committee (EFC) or to any subcommittee the latter may designate for that purpose. The same modalities of surveillance should apply to Member States requesting precautionary assistance from the European Financial Stability Facility (EFSF), the European Stability Mechanism (ESM) the International Monetary Fund (IMF) or another international financial institution.’ ‘4. A Member State whose currency is the euro should be subject to enhanced surveillance when it is experiencing — or at risk of experiencing — severe financial disturbance, with a view to ensuring its swift return to a normal situation and to protecting the other euro area Member States against possible negative spillover effects. This enhanced surveillance should include a wider access to the information needed for a close monitoring of the economic, fiscal and financial situation and a regular reporting to the Economic and Financial Committee (EFC) or to any subcommittee the latter may designate for that purpose. The same modalities of surveillance should apply to Member States requesting precautionary assistance from the European Financial Stability Facility (EFSF), the European Financial Stabilisation Mechanism (EFSM), the European Stability Mechanism (ESM) the International Monetary Fund (IMF) or another international financial institution.’

Explanation According to Article 1, the scope of the proposed regulation includes the EFSM.

Amendment 3

Article 1

‘1. This Regulation sets out provisions for strengthening the economic and budgetary surveillance of Member States experiencing or threatened with serious difficulties with respect to their financial stability and/or that receive or may receive financial assistance from one or several other States, the European Financial Stability Facility (EFSF), theEuropean Financial Stability Mechanism (EFSM), the European Stability Mechanism (ESM) or other International Financial Institutions (IFI), such as the International Monetary Fund (IMF).’ ‘1. This Regulation sets out provisions for strengthening the economic and budgetary surveillance of Member States experiencing or threatened with serious difficulties with respect to their financial stability and/or that have requested or receive financial assistance from one or several other States, the European FinancialStability Facility (EFSF), the European Financial Stabilisation Mechanism (EFSM), the European Stability Mechanism (ESM) or other ínternational financial institutions (IFI), such as the International Monetary Fund (IMF).’

Explanation For legal certainty, it is preferable to use the same terms throughout the proposed regulation.

Amendment 4

Article 2(1)

‘1. The Commission may decide to make a Member State experiencing severe difficulties with regard to its financial stability subject to enhanced surveillance. The Member State concerned shall be given the possibility to express its views beforehand. The Commission shall decide every six months whether to prolong the enhanced surveillance.’ ‘1. The Commission shall make a Member State experiencing or threatened with serious difficulties with regard to its financial stability, which are likely to have adverse spillover effects on other euro area Member States, subject to enhanced surveillance. The Member State concerned shall be given the possibility to express its views beforehand in the EFC, or to any subcommittee the latter may designate for that purpose. The Commission shall decide every six months whether to prolong the enhanced surveillance and shall report its findings to the EFC, or to any subcommittee the latter may designate for that purpose. The Council may request the Commission to initiate, continue or finalise its enhanced surveillance.’

Explanation For legal certainty, it is preferable to use the same terms throughout the proposed regulation. A threat of serious difficulties would also warrant enhanced surveillance to prevent the situation from deteriorating at an early stage. In view of potential serious spillover effects and risks to the stability of the euro area, the Commission’s discretion should be restricted when deciding whether to put a Member State under enhanced surveillance, which is achieved with the use of the word ‘shall’. In addition, the EFC or any designated subcommittee should be kept informed about the decision to put a Member State under enhanced surveillance and the progress of Member States under enhanced surveillance. This would allow the EFC to prepare an informed decision for the Council in relation to any steps of the procedure. Without prejudice to the Commission’s competence, the Council should be empowered to request the Commission to initiate or pursue enhanced surveillance.

Amendment 5

Article 2(2)

‘2. The Commission shall decide to make a Member State receiving a financial assistance on a precautionary basis from one or several other States, the EFSF, the ESM or any other International Financial Institution, such as the IMF, subject to enhanced surveillance. The Commission shall establish a list of the precautionary financial assistance instruments concerned and keep it updated to take into account possible changes in the financial support policy of the EFSF, ESM or of any other relevant International Financial Institution.’ ‘2. The Commission shall decide to make a Member State requesting access or receiving financial assistance on a precautionary basis from one or several other States, the EFSF, the EFSM, the ESM or any other International Financial Institution, such as the IMF, subject to enhanced surveillance. The Commission shall establish a list of the precautionary financial assistance instruments concerned and keep it updated to take into account possible changes in the financial support policy of the EFSF, ESM or of any other relevant International Financial Institution.’

Explanation Once again, enhanced surveillance should start at an early stage, as soon as a Member State has requested financial assistance. Provision needs to be clearer, in order to avoid any doubt regarding the automaticity of a Member State coming under the enhanced surveillance as of the moment it has requested the assistance. According to Article 1, the scope of the proposed regulation includes financial assistance provided by the EFSM.

Amendment 6

Article 2(3)

‘3. Paragraph 2 shall not apply to a Member State receiving a financial assistance on a precautionary basis in the form of a credit line which is not conditioned to the adoption of new policy measures by the concerned Member State, as long as the credit line is not drawn.’ ‘3. Paragraph 2 shall not apply to a Member State receiving financial assistance on a precautionary basis in the form of a credit line which is not conditioned to the adoption of new policy measures by the concerned Member State, as long as the credit line is not drawn. The Commission shall monitor the ongoing compliance with the eligibility criteria laid down in Union and intergovernmental financial assistance instruments after the said financial assistance is granted.’

Explanation The exemption of Member States receiving financial assistance on a precautionary basis in the form of a credit line which is not conditional on the adoption of new policy measures by the concerned Member State, as long as the credit line is not drawn, should not exempt them from being monitored regarding compliance with the eligibility criteria.

Amendment 7

Article 3(3)

‘3. On a request from the Commission, the Member State under enhanced surveillance shall: …’ ‘3. On a request from the Commission, the Member State under enhanced surveillance shall: … The Council may request the Commission to ask the Member State under enhanced surveillance to perform the actions set out in points (a), (b) and (d) and/or to be subject to the requirement set out in point (c).’

Explanation In view of possible large spillovers, it would be useful if the Council could request, through the intermediary of the Commission, additional information or specific actions enumerated in Article 3(3).

Amendment 8

Article 3(5)

‘5. Where it is concluded — on the basis of the assessment foreseen in paragraph 4 — that further measures are needed and the financial situation of the Member State concerned has significant adverse effects onthe financial stability of the euro area, the Council, acting by qualified majority on a proposal from the Commission, may recommend to the Member State concerned to seek financial assistance and to prepare a macroeconomic adjustment programme. The Council may decide to make this recommendation public.’ ‘5. Where it is concluded — on the basis of the assessment foreseen in paragraph 4 — that further measures are needed and the financial situation of the Member State concerned has significant adverse effects onthe financial stability of the euro area, the Council, acting by qualified majority on a proposal from the Commission, shall recommend to the Member State concerned to seek financial assistance and to prepare a macroeconomic adjustment programme. The Council may decide to make this recommendation public.’

Explanation Article 3(5) should be reinforced by obliging the Council to make a recommendation to seek financial assistance if the situation of the Member State concerned has significant adverse effects on the financial stability of the euro area, which indeed provides a very strong justification.

Amendment 9

Article 4

‘A Member State wishing to obtain financial assistance from one or several other States, the EFSF, the ESM, the International Monetary Fund (IMF) or another institution outside of the Union framework shall immediately inform the Council, the Commission and the ECB of its intention. The EFC, or any subcommittee the latter may designate for that purpose, shall hold a discussion on this envisaged request, after having received an assessment from the Commission.’ ‘A Member State intending to request financial assistance from one or several other States, the EFSF, the EFSM, the ESM, the International Monetary Fund (IMF) or another institution outside of the Union framework shall immediately inform the Council, the Commission and the ECB of its intention. The EFC, or any subcommittee the latter may designate for that purpose, shall hold a discussion on this envisaged request, after having received an assessment from the Commission, with a view to examining, inter alia, the possibilities available under existing Union or euro area financial instruments and facilities of international financial institutions and lenders, before the Member State addresses potential lenders.’

Explanation The obligations of euro area Member States should entail more than just information sharing with their European partners and explicitly include the obligation to discuss making use of the different financial assistance facilities available at European and international level. According to Article 1, the scope of the proposed regulation also includes the EFSM.

Amendment 10

Article 5

‘Where financial assistance is sought from the EFSF or the ESM, the Commission shall prepare — in liaison with the ECB and, wherever possible, the IMF — an analysis of the sustainability of the government debt of the Member State concerned, including the Member State's ability to repay the envisaged financial assistance, and forward it to the EFC or to any subcommittee the latter may designate for that purpose.’ ‘Where financial assistance is sought from the EFSF or the ESM, the Commission shall prepare — in liaison with the ECB and, whereappropriate, the IMF — an analysis of the sustainability of the government debt of the Member State concerned, including the Member State's ability to repay the envisaged financial assistance, and forward it to the EFC or to any subcommittee the latter may designate for that purpose.’

Explanation In line with current practice, the IMF should be involved in analysing the sustainability of government debt. For reasons of legal certainty, the same wording should be used throughout the text.

Amendment 11

Article 6

‘1. A Member State receiving financial assistance from one or several other States, the IMF, the EFSF or the ESM shall prepare in agreement with the Commission — acting in liaison with the ECB — a draft adjustment programme aimed at re-establishing a sound and sustainable economic and financial situation and restoring its capacity to finance itself fully on the financial markets. The draft adjustment programme shall take due account of the current recommendations addressed to the Member State concerned under Articles 121, 126 and/or 148 of the Treaty — and its actions to comply with them — while aiming at broadening, strengthening and deepening the required policy measures. 2. The Council, acting by qualified majority on a proposal from the Commission, shall approve the macroeconomic adjustment programme. 3. The Commission, in liaison with the ECB, shall monitor the progress made in the implementation of the adjustment programme and inform every three months the EFC or any subcommittee the latter may designate for that purpose. The Member State concerned shall give the Commission its full cooperation. It shall in particular provide to the Commission all the information that the latter deems necessary for the monitoring of the programme. Article 3(3) shall apply. 4. The Commission — in liaison with the ECB — shall examine with the Member State concerned the changes that may be needed to its adjustment programme. The Council, acting by a qualified majority on a proposal from the Commission, shall decide on any change to be made to the adjustment programme. … 6. A Member State subject to an adjustment programme experiencing insufficient administrative capacity or significant problems in the implementation of its adjustment programme shall seek technical assistance from the Commission.’ ‘1. A Member State requesting financial assistance from one or several other States, the IMF, the EFSF, the EFSM or the ESM shall prepare in agreement with the Commission — acting in liaison with the ECB and, where appropriate, the IMF — a draft adjustment programme aimed at re-establishing a sound and sustainable economic and financial situation and restoring its capacity to finance itself fully on the financial markets. The draft adjustment programme shall take due account of the current recommendations addressed to the Member State concerned under Articles 121, 126, 136 and/or 148 of the Treaty — and its actions to comply with them — while aiming at broadening, strengthening and deepening the required policy measures. 2. The Council, acting by qualified majority on a proposal from the Commission, shall approve the macroeconomic adjustment programme. Where the source of the financial assistance is the EFSM, the EFSF or the ESM, the terms of the Commission proposal shall be in full accordance with those agreed between the parties involved in the context of granting access to the abovementioned Union and intergovernmental facilities. 3. The Commission, in liaison with the ECB and, where appropriate, the IMF, shall monitor the progress made in the implementation of the adjustment programme. It shall inform every three months the EFC or any subcommittee the latter may designate for that purpose. The Member State concerned shall give the Commission its full cooperation. It shall in particular provide to the Commission all the information that the latter deems necessary for the monitoring of the programme. Article 3(3) shall apply. In the case of insufficient cooperation, the Council, on a proposal from the Commission, may address a public request to the Member State concerned laying down the action to be taken by that Member State. 4. The Commission — in liaison with the ECB and, where appropriate, the IMF — shall examine with the Member State concerned the changes that may be needed to its adjustment programme. The Council, acting by a qualified majority on a proposal from the Commission, shall decide on any change to be made to the adjustment programme. … 6. A Member State subject to an adjustment programme experiencing insufficient administrative capacity or significant problems in the implementation of its adjustment programme shall seek technical assistance from the Commission, which may constitute for this purpose groups of experts with Member States and other European Union and/or relevant internationalinstitutions. Technical assistance may include the establishment of a permanent resident adviser and support staff from the European Union institutions in the Member State concerned, who would advise the authorities of the Member State concerned of the adjustment programme implementation and coordinate with the institutions involved.’

Explanation According to Article 1, the scope of the proposed regulation includes the EFSM. The proposed drafting also aims to clarify the responsibilities of the institutions involved. Paragraph 2 seeks to clarify that Member States benefiting from financial assistance under the arrangements with the EFSM, the EFSF and the ESM will not be asked to prepare two different macroeconomic adjustment programmes, but that rather all economic policy conditions agreed with the Member State concerned in the context of granting access to the EFSM, the EFSF and the ESM will be fully respected in the macroeconomic adjustment programme under this Article. In paragraph 3, the threat of publicity, if a Member State is uncooperative, may provide an incentive to the Member State to take further action. Other institutions with relevant expertise and Member States could usefully provide technical assistance in addition to the Commission. A permanent resident adviser would increase significantly, the probability of adequate programme implementation.

Amendment 12

Article 11(1), (5)(new) and (6)(new)

‘1. A Member State shall be under post-programme surveillance as long as a minimum of 75 % of the financial assistance received from one or several other Member States, the EFSM, the EFSF or the ESM has not been repaid. The Council, acting on a qualified majority on a proposal from the Commission, may extend the duration of the post-programme surveillance.’ ‘1. A Member State shall be under post-programme surveillance as long as a minimum of 75 % of the financial assistance received from one or several other States, the EFSM, the EFSF , the ESM or other IFI has not been repaid. The Council, acting on a qualified majority on a proposal from the Commission, may extend the duration of the post-programme surveillance. … 5. The relevant committee of the European Parliament may invite representatives of the Member State concerned to participate in an exchange of views on the post-programme monitoring. 6. Representatives of the Commission may be invited by the Parliament of the Member State concerned to participate in an exchange of views on the post-programme monitoring.’

Explanation The first comment aims at aligning the wording of this article with Article 1(1). Increased public pressure by the European and national parliaments add to the incentives of Member States concerned to pursue adequate policies. This involvement should also be foreseen for the post-programme surveillance, as it is foreseen in relation to enhanced surveillance (Article 3) and macroeconomic adjustment programmes (Article 6).

Amendment 13

Article 12

‘For the measures referred to in Articles 2(1), 3, 6(2), 6(4) and 11(4), only members of the Council representing Member States whose currency is the euro shall vote and the Council shall act without taking into account the vote of the member of the Council representing the Member State concerned. A qualified majority of the members of the Council referred to in the first paragraph shall be calculated in accordance with Article 238(3)(b) of the Treaty.’ ‘For the measures referred to in Articles , 3(5), 6(2), 6(4), 6(5), 11(1) and 11(4), only members of the Council representing Member States whose currency is the euro shall vote and the Council shall act without taking into account the vote of the member of the Council representing the Member State concerned. A qualified majority of the members of the Council referred to in the first paragraph shall be calculated in accordance with Article 238(3)(b) of the Treaty.’

Explanation Article 12 must refer to all the decisions to be taken by the Council.

Amendment 14

Article 13

‘The provisions of Article 5 and 6 do not apply to financial assistance granted on a precautionary basis and to loans made for recapitalising financial institutions.’ ‘The provisions of paragraphs (1) to (5) of Article 6 do not apply to financial assistance granted on a precautionary basis and to loans made for recapitalising financial institutions. This is without prejudice to the conditions attached to those types of financial assistance under the respective Union or intergovernmental financial assistance instruments.’