The EU Statement on Greece

Here is the text issued by the EU leaders:

We reaffirm that all euro area members must conduct sound national policies in line with the agreed rules and should be aware of their shared responsibility for the economic and financial stability in  the area.

We fully support the efforts of the Greek government and welcome the additional measures
announced on 3 March which are sufficient to safeguard the 2010 budgetary targets. We recognize  that the Greek authorities have taken ambitious and decisive action which should allow Greece to regain the full confidence of the markets.

The consolidation measures taken by Greece are an important contribution to enhancing fiscal
sustainability and market confidence. The Greek government has not requested any financial
support. Consequently, today no decision has been taken to activate the below mentioned

In this context, Euro area member states reaffirm their willingness to take determined and
coordinated action, if needed, to safeguard financial stability in the euro area as a whole, as decided the 11th of February.

As part of a package involving substantial International Monetary Fund financing and a majority of European financing, Euro area member states, are ready to contribute to coordinated bilateral loans.

This mechanism, complementing International Monetary Fund financing, has to be considered
ultima ratio, meaning in particular that market financing is insufficient. Any disbursement on the
bilateral loans would be decided by the euro area member states by unanimity subject to strong
conditionality and based on an assessment by the European Commission and the European Central Bank. We expect Euro-Member states to participate on the basis of their respective ECB capital key.

The objective of this mechanism will not be to provide financing at average euro area interest rates, but to set incentives to return to market financing as soon as possible by risk adequate pricing.  Interest rates will be non-concessional, i.e. not contain any subsidy element. Decisions under this mechanism will be taken in full consistency with the Treaty framework and national laws.

The De-Linking of Ireland and the Southern Periphery

John Murray Brown writes in today’s FT on the Irish situation – you can read it here.

Nouriel Roubini and Arnab Das write on the Greek situation and the implications for the euro area: you can read it here.

Goodhart and Tsomocos on Adjustment within EMU

This article in today’s FT offers yet another adjustment option: you can read it here.

The Travails of EMU

Landon Thomas has an article on the fragility of EMU in today’s New York Times: you can read the article here.

Withdrawal and Expulsion from the EU and EMU

This is an interesting paper from the ECB on the legal dimensions of these scenarios.