Enda Kenny urges Euro leaders to explore EU 'Bad Bank' option and boost business lending

'Nothing less than the credibility of our shared currency and survival of Economic and Monetary Union is at stake'

Speaking at the meeting of the Bureau of the European People's Party in Brussels, Fine Gael Leader Enda Kenny TD said 2009 will be a defining year for the EU. Proposals being put forward by Deputy Kenny include the creation of an EU 'bad bank' and increased European Investment Bank lending to businesses.

"In the face of the greatest economic crisis faced by the Union since its establishment over five decades ago, will we stand together? Or will each Member State prioritise its own short-term national interests, and try to remedy its own economic problems in a way that worsens the problems of others, and thereby expose smaller and weaker Members to the whims of financial speculators?

"It is true that some individual Member States, such as Ireland, have mismanaged their domestic economic affairs by encouraging unsustainable debt-fuelled booms. Clearly, Ireland and other countries need to put their own houses in order. But now is not the time for mutual recrimination among Member States. Nothing less than the credibility of our shared currency and survival of Economic and Monetary Union is at stake. It is in all of our interests to make sure that no country has to leave the eurozone.

"This is why I am working with my fellow leaders in the European People's Party to articulate a clear statement of solidarity among EU members, and to set out ideas that should be considered by the EU Heads of Government when they meet in March for an orderly working out of the vulnerabilities and imbalances that threaten the EU's economic achievements over the last generation.

"Options I would like the EU Heads of Government to explore are:
- The establishment of an EU Bank Resolution Corporation, or 'bad bank', to help accelerate the restoration to health of European banks, without which economic recovery will not happen. In the United States in the 1980s after the Savings & Loan scandal, a similar approach was adopted.- A significant expansion of the level of resources available to the European Investment Bank to support lending to European businesses, and in particular to small and medium-sized enterprises;- Removing restrictions on the European Central Bank to pursue the types of anti-deflationary policies now being pursued by the Bank of England and the US Federal Reserve;- Commitments to avoid 'beggar-thy-neighbour' exchange rate adjustments that export unemployment and deflation from one EU country to another."(Fine Gael)