Remarks by Paschal Donohoe following the Eurogroup meeting of 16 June 2022

(Source: Council of the EU and European Council)

I want to begin by wishing you all a happy Bloomsday. Today 100 years ago the great masterpiece Ulysses by James Joyce was published in Dublin. To mark this special day in European and Irish literature, I presented to every member of the Eurogroup a copy of Ulysses in their own language. I was heartened by the number of colleagues who said they had either read it or were planning to read it.

The theme of our Eurogroup meeting today was one of resilience. The steps that we are taking to deepen the resilience of the euro in the time ahead and the commitment that the Eurogroup has to maintain the resilience and robustness of the euro area in all circumstances.

Today we made a number of decisions that are very tangible demonstrations of our commitment to that resilience and our commitment to deepen it further. We recommended, as the Eurogroup, that Croatia becomes the 20th member of our euro family – a very clear signal regarding the strength of the euro area and its growing membership.

We also paved the way for the exit by the Greek economy from enhanced surveillance. And we agreed a plan today for very concrete actions that will further strengthen our Banking Union.

I’ll say a word about each of those decisions today, and I’ll begin by the discussion with regard to Croatia. That discussion began by the Eurogroup welcoming the convergence reports that were published by the Commission and the ECB with regard to Croatia fulfilling the criteria that are necessary for their economy to join the euro. On the basis of the convergence reports that were presented to us, the Eurogroup has now recommended that Croatia adopt the euro from 1 January 2023. I look forward to this recommendation being formally adopted tomorrow by the Ecofin Council.

This is a very well-deserved achievement for Croatia, and it is a recognition by Eurogroup and the institutions of the European Union of the commitment and the extraordinary work of Prime Minister Plenković, of Minister Marić, and all of our colleagues in the government of Croatia fulfilling all of the steps that are needed to join our shared currency.

It demonstrates that the euro, which this year marks its 20th anniversary as a physical currency, is a union that is growing and that will become stronger by growing. It is first and foremost a symbol of how we use our integration and our interdependence as a source of strength. And the decision by the Eurogroup to welcome Croatia into that family and the determination of Croatia to join our group is a sign of that resilience.

Secondly, we had a further sign of that resilience today when we discussed the progress of Greece with regard to their reform implementation and their macroeconomic outlook. The basis of that discussion was the 14th Enhanced Surveillance report presented by the Commission. We were able to see the very impressive resilience of the Greek economy, even when dealing with the shocks of a pandemic, forest fires, earthquakes, and now the energy and human consequences of a war.

Despite all of those many, many challenges, we’re seeing a continued commitment to the implementation of reforms within the Greek economy by the Greek government. And we’re seeing very clear signs of the growing resilience of the Greek economy.

So we welcomed the assessment by our institutions that the necessary conditions are now in place to confirm the release of the 7th tranche of policy contingent debt measures. Those measures are worth €748 million, and you’ll find all the details of that decision in the statement that I issued earlier on this topic.

Given the progress that has been made by Minister Staikouras, the Greek government and the Greek people, we welcomed today the intention of the European Commission not to prolong the enhanced surveillance of the Greek economy after the expiry of the programme at the end of August.

This is a very significant achievement by the Greek government, by the people of Greece, and – combined with the earlier abolition of capital controls, combined with the full repayment of the IMF loans – another clear signal of the return to normality for the Greek economy and of the continued progress that has been made in economic policy since 2010, and in particular under the current Greek government. This was recognised as a landmark moment by the Eurogroup upon the presentation of progress by Minister Staikouras.

And then finally, in the third sign of the resilience of our efforts, we have reached agreement on a further step forward on Banking Union. I have been making the case for the completion of Banking Union. The statement that the Eurogroup has issued this evening underlines the commitment to, at the right time, complete Banking Union. You can’t complete a project if you don’t take every opportunity to strengthen it step by step. That is what the Eurogroup agreed to this evening.

We agreed a plan for action. What we saw here this evening after a huge amount of work is an example of how Europe works. I am privileged to occupy a role for Europe, and I made the case for broader, big collective steps. But what the Eurogroup has done today is to agree to a step that will be a clear and strong improvement ahead of where we are today. That’s the way our economic union works and it is the way we will make more progress on Banking Union.

This evening we agreed that we will strengthen the common framework for bank crisis management and also for the rules governing the use of national deposit guarantee funds. The Commission will bring forward a proposal with regard to that. The Eurogroup made a political commitment to turn that progress into reality.

This is a sign of how step by step we will strengthen the Banking Union. We will make progress towards a complete Banking Union by doing it in different phases.

We also had a discussion on the economic outlook. President Lagarde briefed us on the latest ECB macroeconomic projections and the related monetary policy decisions. Commissioner Gentiloni gave an update on the Commission thinking regarding where we stand and with the uncertainty that we acknowledge is there.

What all members of the Eurogroup reaffirmed this evening was our commitment to taking the steps and policy decisions that are needed to ensure the resilience of the euro area, and our confidence that we will maintain that resilience. If we look at the progress with the implementation of the recovery plan, if we look at the levels of employment within the euro area, we believe these are very strong foundations for how the euro will navigate its way through changing economic conditions.

Finally and briefly, we reviewed where we are with the post-programme surveillance reports with regard to Spain, Cyprus, Portugal and Ireland and the Eurogroup also adopted its work programme for the second half of the year.

I also had the pleasure earlier today of chairing the annual meeting of the ESM Board of Governors. This was a symbolically important meeting for many reasons: the 10th anniversary of the operations of the ESM, it’s the last meeting with Klaus Regling at the helm of this institution. I thank him for his enormous work.

With my fellow governors I will soon return to the process to appoint his replacement. We made another step of progress towards that today, but we have more work to do.

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