Much has been speculated about who promised what at last night's summit, and who guaranteed that the ESM would do this, that and the other, as once again, just like last summer, the ESM is becoming the most universal Swiss army knife ever conceived (just pray it never has to be actually used). Here, courtesy of Reuters [6], are excerpts of what they all really said.
GERMAN CHANCELLOR ANGELA MERKEL
ON CONDITIONALITY FOR BOND-BUYING BY BAILOUT FUNDS:
"We have taken important decisions last night. First we agreed that if countries need the instruments to buy bonds on the primary or secondary market from the EFSF or ESM then the conditionality will be agreed as follows:
"The country report will be presented to the Commission on which basis we will agree a memorandum of understanding in which there will be a time-frame. The EU/IMF 'troika' will then supervise, as it is always usual in the EFSF and ESM, whether the conditions are met.
"That would be the case if Spain or Italy, with regards to their interest burden, make use of such instruments. Then this conditionality would apply, which we have agreed on precisely, according to the rules we have."
ON SPANISH SUPPORT:
"Secondly, regarding the banking recapitalisation which Spain has requested, a request will be made with the EFSF. Once the ESM becomes available, then the application will be transferred to the ESM. The seniority of the bonds will not be changed. For Spain we won't do what is otherwise applicable in the ESM regarding the preferred creditor status because the request was made through the EFSF, where such details do not apply."
EUROPEAN CENTRAL BANK PRESIDENT MARIO DRAGHI
ON THE SUMMIT RESULTS:
"It showed the long-term commitment to the euro by all member states of the euro area, and also it reached tangible results in the shorter term. The waiver of the preferred creditor status of the ESM (permanent bailout fund) for Spain is one of the results.
"The future possibility of using the ESM for direct recapitalisation of the banks which was something that the ECB had advocated for some time is also another good result.
"But we have to keep in mind that all these things should be, to be credible, should be accompanied by strict conditionality. This is essential, otherwise they will not be credible.
"Also, the Commission will present a proposal based on Article 127.6 of the Treaty for the creation of a single supervisory mechanism and within which the ECB will take up supervisory tasks for the banks of the euro zone."
Following are earlier comments by EU leaders before Friday's discussions:
FRENCH PRESIDENT FRANCOIS HOLLANDE
ON THE AGREEMENTS REACHED:
"There were three advances. The first is on the recapitalisation of the banks with banking supervision and with a calendar. The second is to allow easier solutions for Spain, which can be put into effect rapidly. And finally, there will be full use of the (bailout) instruments, the EFSF and the ESM, to give states that have made efforts the necessary protection in relation to interest rates."
ON THE IMPORTANCE OF WHAT EU LEADERS DECIDED:
"It is very important that we put into motion procedures for immediate action - something that was much hoped for. Bank supervision for a recapitalisation of the banks will take a bit more time, but this will be a lasting move in the right direction.
"We defined a vision for the euro - for economic and monetary union - saying what we will do together, and there will be greater solidarity at each step in integration. The banking union was the first illustration of this."
LITHUANIAN PRESIDENT DALIA GRYBAUSKAITE
ON IMPACT OF EURO ZONE DEAL ON SHORT-TERM BOND SUPPORT:
"We are heading for a future where we will need very general supervisory bodies to look more carefully, more strictly, and (which are) more responsible for the financial sector and banking sector, and that's where we are heading.
"I hope that in a very few weeks, the euro zone leaders will be able to find a concrete mechanism for how to control the not-very-well-behaving banks and to help them."