BRUSSELS (MNI) – European Council President Herman Van Rompuy,
expressing concern about renewed market tensions and the substantially
higher cost of borrowing for European governments, stressed Thursday
that EU officials are “determined to use the full range of measures
available to ensure the stability of the Euro area as a whole.”

He reiterated all the stabilization measures taken in recent
months, including the creation of a European bailout fund, emergency aid
packages for Ireland and Greece, and new policies by national
governments intended to reduce debts and deficits.

Spain and Portugal, considered by many to be next in the crosshairs
of financial markets, have announced measures to tackle their fiscal
problems, and more will be announced “soon,” Van Rompuy said.

He also said that all members states fully support stabilization
policies by the European Central Bank, including the extension of its
unlimited liquidity provisions through the first quarter of 2011 and its
ongoing purchase of government bonds.

A verbatim text of Van Rompuy’s statement is below:

“In the last weeks, the Euro area has faced renewed market
tensions. Several Member States have experienced a substantial increase
in their cost of financing. There is somewhat of a paradox because the
real economic is growing faster than expected, and business and consumer
confidence has improved a lot.

Compared with other major economic players at the global level, the
Euro area has sound fundamentals. We took bold decisions in the last
spring. We are providing financial support to two countries of the euro
area. They are implementing ambitious adjustment programmes to correct
their imbalances, and address their weaknesses.

All EU institutions are determined to use the full range of
measures available to ensure the stability of the Euro area as a whole.
Our strategy is based on four pillars: First, at the current juncture,
credible fiscal consolidation is key to financial stability in the Euro
area. All Euro area Member States are implementing seriously and with
determination consolidation strategies, at different pace depending on
their fiscal situation.

Greece and Ireland are undertaking very demanding consolidation
efforts, coupled with structural reforms, in the context of the
adjustment program they have agreed with the IMF and the EU. Spain has
announced very concrete and impressive additional measures last week,
complementing the package decided in May, to cut the deficit and the
debt, and enhance growth potential. Portugal has passed a budget fully
consistent with the recommendations given by the Commission and the
Council in the context of the excessive deficit procedure. Further
concrete measures to underpin this objective and enhance competitiveness
will be announced soon.

Secondly, over and above IMF instruments, we have now the financial
instruments to support Member States facing difficulties in financing,
so as to preserve the stability of the euro area as a whole. Let me just
say very clearly that the Irish program has only drawn a very limited
amount from the facility. I recall our determination to do whatever it
takes to ensure financial stability of the Euro area.

We have agreed to set up a permanent financial stability mechanism
for after mid-2013, and the Eurogroup has already agreed upon some key
features of this mechanism. I expect the European Council next week to
decide on a very limited treaty change to this end. Third, in-depth
reform of our economic governance.

We agreed at the end of October a major reform of our economic
governance. The Stability and Growth pact will be equipped with a more
effective sanction system and more attention will be paid to debt. The
Pact will be complemented with a new macro-economic surveillance
framework to identify and correct earlier imbalances and bubbles. We
will have stronger national fiscal frameworks. This has now to be
transformed into legislation but should become fully effective by next
summer.

Fourth, continue to strengthen our financial system, building on
regular stress tests, and further improve our financial regulations.
Finally, I would like to underline the action of the ECB to ensure the
proper functioning of monetary policy channels and the financial
stability of the euro area. This action is fully supported by the Member
States. We will continue to work on these priorities in the coming
weeks, because concrete delivery is key.

I am convinced that the euro area will come out of the crisis
stronger.”

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