August 5th, 2011
03:54 PM GMT
Olli Rehn, European Commissioner for economic and monetary affairs, Friday said financial markets had not reacted as expected to measures taken by Europe’s leaders to stem the eurozone's economic crisis.
He said the tensions were not justified by economic and budgetary fundamentals of the bloc. Further, the political will to defend the euro should not be underestimated. Euro leaders, he said, had proven they could take decisions and respond to an evolving situation.
Highlights from his speech follow:
On the 21 July agreement by European leaders, in which Greece got improved financing conditions and the Europe’s bail-out funds were given more flexibility to alleviate market pressures, Rehn said:
“We are doing what is necessary to implement the agreement fully and as rapidly as possible. Of course it would have been fantastic if the agreement had been fully operational as of 22nd of July but this was of course impossible. The very technical details of the agreement must be fleshed out and then accepted and ratified in each member state.”
The process was a “necessary and legitimate price to pay for living in democracies,” he said, with experts from his department, euro member states, the European Central Bank and the EFSF – Europe’s bail-out mechanism — “working night and day to put flesh on the bones of the 21st July agreement.”
Rehn said the process should take weeks, rather than months, and “in order to end uncertainly the processes should be finalized by early September.”
Rehn said the technical and political processes were mutually dependent. “There are different procedures for ratification across Europe and we expect all member states to do what is expected of them to meet that timeline and implement the decisions that they have themselves taken.”
On Greece, the first eurozone country to take a bail-out from the IMF and one which has been at the epicenter of the crisis, Rehn said:
“Heightened concerns around Greece are in our view not warranted. Investors seem unconvinced that Greek public debt will be put on sustainable track. I say that this is not the right conclusion.
"[The] 21 July agreement did deliver major improvements in terms and conditions for financing Greek public debt. There will be a significant extension of average maturity of all loans and a lowering of interest rates on official loans.”
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