BRUSSELS (MNI) – The following is the text of the remarks of
President of the European Council Herman Van Rompuy following the end of
the Euro Summit:

We are all aware that the situation is serious. From a series of
national debt crises, the situation was evolving into a systemic
concern, threatening the stability of the Eurozone as whole. This threat
has to be contained. We therefore took last Sunday and tonight important
decisions on the four fronts where action is needed.

1. A sustainable solution for Greece. We want to put Greece on a
track where, in 2020, it will have reduced its public debt to 120 pct.
of GDP. Since July, market conditions worsened. The new programme
includes an extra effort by the official sector. A new EU-IMF programme
of up to 100 billion will be put in place by the end of the year. It
also includes a voluntary contribution by private creditors who had lent
to Greece. It was agreed by them tonight and amounts to a nominal
discount of 50 pct on notional Greek debt.

2. A sufficient firewall against contagion, thanks to an agreement
to multiply up to fivefold the firepower of the European Financial
Stability Facility (EFSF) rescue fund. The leverage could be around 1
trillion, under certain assumptions about market conditions, the set-up
and investors responsiveness in view of economic policies. We have
identified two approaches for the EFSF. The first one aims at giving
credit enhancement to sovereign bonds issued by Member States. Under the
second approach, the Fund could set up one or several Special Purpose
Vehicles to finance its operations. Each option could lead to leverage
of up to 4 or 5 times. They can be used simultaneously, so as to
increase the robustness of the financing strategy.

3. We foster confidence in the European banking sector. We approved
a co-ordinated scheme to recapitalise banks across Europe. The ratio of
highest quality capital will be increased to 9%. This will enable the
banks to withstand shocks important in the current exceptional
circumstances. State guarantees to improve the longer term funding will
safeguard the flow of credit to the real economy. It is essential for
the prospects for growth.

4. Further fiscal consolidation by those Member States who need
more sustainable public finances and more structural reforms.

In this context, the Euro Summit welcomes the clear commitment of
Italy to achieve these objectives and to abide by the timetable it set
itself. This ambitious package, in particular the measures to increase
competiveness and to liberalise the economy, now need implementation. We
also commend Italy’s commitment to achieve a balanced budget by 2013. We
take of the note of the plan to increase the retirement age to 67 years
by 2026; the way to get there should be defined by the end of this year.

Let me make a general remark here.

Compared to eight or ten years ago, the pressure which leaders put
on each other has become much more effective, as the events of the last
days show. Today no government can afford to underestimate the possible
impact of for instance public debts or housing bubbles in another
Eurozone country on its own economy; they would be punished by the
voters, and by the markets. Peer pressure has become more effective,
because the money of their taxpayers is at stake.

Yet we want to further improve the economic governance framework.
Today we decided to go even beyond the six-pack legislation on some
points, as of now. We also approved ten measures to improve the
governance of the euro area. Different other ideas have been suggested
to reinforce fiscal discipline.

Therefore the Euro Summit decided to reflect “on a further
strengthening of economic convergence within the euro area, on improving
fiscal discipline and deepening economic union, including exploring the
possibility of limited Treaty changes”. The full European Council will
revert to the issue in December on the basis of an interim report by
myself in close cooperation with Presidents Barroso and the President of
the Eurogroup. The report will be finalised by March 2012.

We do not want to repeat some of the errors from the recent past.
In taking todays decisions, we lay the foundations for our future. All
Members of the Euro Summit are determined to follow this path.

–end of Van Rompuy Statement–

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