BRUSSELS (MNI) – The Eurozone finance ministers, the Eurogroup,
released the following statement early Tuesday morning regarding their
followup to the decisions taken by EU leaders at the June 29 summit:

“In line with the Euro Summit statement of 26 October 2011, the
Eurogroup will prepare the Euro Summit meetings and ensure their
follow-up. In doing so, as is presently the case, it will deliver on its
role to ensure ever closer coordination of economic policies and to
promote enhanced economic and fiscal surveillance as well as financial
stability in the euro area.

We reaffirm our strong commitment to do whatever is necessary to
ensure the financial stability of the euro area, in particular through
the flexible and efficient use of existing EFSF/ESM instruments for
Member States respecting their Country Specific Recommendations and
their other commitments including their respective timelines, under the
European Semester, the Stability and Growth Pact and the Macroeconomic
Imbalances Procedure.

As an immediate follow-up, the ECB and EFSF have today signed a
technical agency agreement, creating the possibility of an efficient
conduct of market operations by the EFSF. As soon as the ESM has been
established, a similar agreement will be concluded between the ECB and
ESM. In addition, the Eurogroup has politically endorsed the ESM
investment policy guideline. Thus, by the time of the entry into force
of the ESM treaty and the formal approval by the ESM governing bodies,
all ESM instruments will be fully operational so that their
effectiveness and efficiency would be ensured.

The Eurogroup has today reached a political understanding on the
draft MoU underlying the financial assistance for the recapitalisation
of financial institutions for Spain, to be provided via the EFSF until
the ESM becomes available and then transferred to the ESM without
gaining seniority status. The Eurogroup envisages providing the final
approval of the programme by 20 July, after national procedures have
been completed. The Eurogroup supports the recently adopted Commission
recommendation to extend the deadline for the correction of the
excessive deficit in Spain by one year to 2014.

The Commission, in liaison with the ECB, and the IMF are currently
conducting its seventh review of the Irish adjustment programme, in the
context of which discussions will be held on technical solutions to
improve the sustainability of the well-performing adjustment programme.

The Eurogroup will consider the issue again at its meeting in
September. Similar cases will be treated equally, taking into account
changed circumstances. The Eurogroup has requested the Troika to work
together with the Portuguese authorities during the fifth review mission
that will start on 28 August so as to ensure that the adjustment process
remains on track.

The Eurogroup took note that a fully-fledged programme is expected
to be negotiated with the Cypriot authorities. The Eurogroup welcomes
the Commission’s intention to present proposals in early September,
notably on the basis of article 127(6) TFEU, for a single supervisory
mechanism involving the ECB. We expect the Council to consider these
proposals as a matter of urgency by the end of 2012.

In order to break the vicious circle between banks and sovereigns,
technical discussions on the future ESM direct bank recapitalisation
instrument will also start in September so that the ESM could, following
a regular decision, have the possibility to recapitalise banks directly
once an effective single supervisory mechanism is established.”

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