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Remarks by Executive Vice-President Dombrovskis at the ECOFIN press conference

Met dank overgenomen van Europese Commissie (EC), gepubliceerd op woensdag 4 november 2020.

Ladies and gentlemen, lieber Olaf

Allow me first to express my heartfelt condolences to the people of Austria and France on the devastating terrorist attacks. We stand by you.

Today's ECOFIN is taking place as many EU countries are again imposing tighter restrictions to fight the spread of the coronavirus. The Commission will publish its autumn economic forecast tomorrow, but already today we can say that we expect a slower recovery than previously thought.The months ahead will be challenging for everyone, so it is especially important that we discuss and coordinate our policies.

We have come a long way since the start of the crisis: we have agreed three safety nets worth €540 billion, including SURE to protect jobs. These will help to cushion the blow and Member States should make full use of them.

Today, there was broad agreement on the economic and social priorities for the year ahead, as set out in our Annual Sustainable Growth Strategy. Also we all share the urgency of reaching a swift agreement on Next Generation EU with its Recovery and Resilience Facility. The Member States need to prepare and implement ambitious Plans with reforms and investments to support the recovery and transform their economies.

Fiscal policies should continue to remain supportive throughout 2021. This is why the general escape clause will also remain active in 2021.

We will reassess the situation in spring 2021 in light of updated macro-economic projections.

Once economic conditions allow, Member States should resume pursuing fiscal policies aimed at achieving prudent medium-term fiscal positions and ensuring debt sustainability.

The European Fiscal Board presented its annual report on the implementation of the EU's fiscal surveillance in 2019, with some ideas regarding the future of the fiscal framework.

Regarding these fiscal rules: yes, we need an open and in-depth debate. The debate we have launched in February was put on hold to focus on immediate challenges. We shall come back to it once this acute phase of the crisis is over. In the meantime, our framework is flexible enough to cope with a wide set of circumstances. The rules will not stand in the way of the recovery and will allow to ensure debt sustainability.

I will turn now to non-performing loans in the banking sector.

So far, the average NPL ratio has stayed low, thanks to collective efforts to reduce risk in the banking sector. However, the pandemic has had a massive impact on the economy. It seems inevitable that banks' asset quality will deteriorate, with rising NPL levels and defaults - albeit with a certain time lag.

Banks' balance sheets could remain impaired for a longer time. That would reduce their ability to lend to the real economy and therefore undermine the economic recovery.

So we must address the NPL issue as early and decisively as possible.

Next month, the Commission will publish a communication outlining the action that could be taken to address the possible rise in NPLs.

It should focus on measures for further developing secondary markets for distressed assets, and on ways to reform the insolvency and debt recovery frameworks.

A final point on the fight against money-laundering.

I am delighted that finance ministers adopted conclusions on the Commission's Anti-Money Laundering Action Plan of May 2020. This will be a good and ambitious basis for preparing a package of legal proposals on AML in the first quarter of 2021.

It will cover a single rulebook, the establishment of a EU-level AML Supervisor as well as a coordination and support mechanism for Financial Intelligence Units.

Money-laundering erodes trust in our banks and financial institutions, in our authorities and governments. Dirty money is highly mobile, and this makes it a complex challenge to deal with.

This is why we need to address this issue consistently at the EU level and we are determined to do so.

Thank you.

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