EU leaders are gradually putting in place the building blocks for closer fiscal and economic union. As widely anticipated, the ESM treaty was finalised while an assessment of the ESM/EFSF resources remains scheduled for March when the next formal EU Summit takes place. Euro area member states announced that the treaty on stability, coordination and governance in the Economic and Monetary Union (EMU) had been finalised.

However, they still left open the crucial issue concerning the procedure for bringing cases of non-compliance with the treaty to the European Court of Justice (ECJ). Germany, in particular has been pushing for a strong role for the ECJ. Apart from the Czech Republic and the UK, all other 25 EU member states are expected to sign the new treaty.

Euro area leaders noted the progress made by Greece in the PSI negotiations and urged all political parties in the country to commit irrevocably to the new EU/IMF programme. They emphasised the latest positive reviews of the Irish and Portuguese programmes and reiterated that they stand ready to provide support to programme countries until they have regained market access, on the condition they successfully implement their programmes. Moreover, they welcomed the measures agreed by Italy and Spain to reduce their public deficits and boost growth and competitiveness and called on them to strengthen their efforts on fiscal consolidation and structural reform.


source: BarCap