We affirm that it is imperative to break the vicious circle between banks and sovereigns. TheCommission will present Proposals on the basis of Article 127(6) for a single supervisory mechanism shortly. We ask the Council to consider these Proposals as a matter of urgencyby the end of 2012. When an effective single supervisory mechanism is established,involving the ECB, for banks in the euro area the ESM could, following a regular decision,have the possibility to recapitalize banks directly. This would rely on appropriateconditionality, including compliance with state aid rules, which should be institutionspecific,sector-specific or economy-wide and would be formalized in a Memorandum ofUnderstanding. The Eurogroup will examine the situation of the Irish financial sector withthe view of further improving the sustainability of the well-performing adjustmentprogramme. Similar cases will be treated equally.
We urge the rapid conclusion of the Memorandum of Understanding attached to the financial support to Spain for recapitalisation of its banking sector. We reaffirm that the financial assistance will be provided by the EFSF until the ESM becomes available, and thatit will then be transferred to the ESM, without gaining seniority status.
We affirm our strong commitment to do what is necessary to ensure the financial stability ofthe euro area, in particular by using the existing EFSF/ESM instruments in a flexible andefficient manner in order to stabilise markets for Member States respecting their CountrySpecific Recommendations and their other commitments including their respectivetimelines, under the European Semester, the Stability and Growth Pact and theMacroeconomic Imbalances Procedure. These conditions should be reflected in aMemorandum of Understanding. We welcome that the ECB has agreed to serve as an agent to EFSF/ESM in conducting market operations in an effective and efficient manner.
We task the Eurogroup to implement these decisions by 9 July 2012.