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Memorandum of Understanding on Specific Economic Policy Conditionalityspecialists to ensure effective delivery of all aspects of the agenda, and adopted definitionsof a cooperative borrower and reasonable living expenses for use in and out-of-court debtworkouts.The Authorities commit to:3. Introduce by May 2014, a binding Code of Conduct for banks that specifies the terms ofengagement between creditors and debtors. Banks will be required to pilot and implementlong-term debt restructuring tools by October 2014 and be compliant with the Code byend-2014.4. Design out-of-court debt restructuring tools for enterprises by May 2014.5. Specify a similar coordination mechanism for SMEs, that will include the use ofstandardized templates as well as a review and appeals procedure by May 2014.6. Adopt and implement both mechanisms in points 4 and 5, inter alia, by making thenecessary legislative changes by July 2014.7. Review the personal and corporate insolvency laws (June 2014), and implementnecessary changes to improve the functioning of in-court insolvency procedures byOctober 2014.8. Establish a regulated profession of insolvency administrators, not restricted to any specificprofession and in line with the EU best practices by October 2014.9. Launch educational services and public awareness campaigns to inform debtors of theiroptions and rights and educate small businesses on financial and credit management byJuly 2014.10. Develop a coherent plan for a means-tested social safety net for vulnerable homeownersby July 2014.11. Implement other supportive measures such as better data collection by May 2014,reducing the costs of the property auction process by June 2014, and introducingresidential and commercial real estate transaction price registers by October 2014.12. Set-up a monthly data collection process to monitor the effectiveness of the transitiondebtor-protection scheme enacted in December 2013. Based on incoming data, theCouncil will prepare a report assessing the effectiveness of the new law and its impact onstrategic default behavior by June 2014, and will propose measures to ensure effectiveimplementation in case of shortcomings.3.5. Overhaul of governance arrangementsThe authorities commit to:1. Enhance, the governance of the HFSF by (i) reviewing the internal safeguards on strictconflict-of-interest rules and related-party transactions and making appropriate changes byMay 2014, (ii) employing personnel with international experience in commercial bankingand NPL resolution and (iii) increasing the number of General Council members to nineand the members with international experience to seven.2. Undertake a broad review of the governance arrangements concerning HFSF'sparticipation in the banks, to be done in consultation with the EC/ECB/IMF by May 2014.3. Based on the review to be undertaken in 3.5.2, adopt appropriate legislative andoperational steps to ensure that financial institutions are run on a sound, commercial basis,by June 2014.190
Memorandum of Understanding on Specific Economic Policy Conditionality3.6. Strategy for the cooperative banking sectorThe BoG commits to:1. Prepare a comprehensive strategy on the cooperative sector, taking into account the roleof Panellinia bank and examine in consultation with the EC/ECB/IMF, by all modalities,including further consolidation or review of their modus operandi, to ensure the sector asa whole has achieved stability and standards that are considered best practicesinternationally (July 2014).2. Implement the comprehensive strategy for the cooperative banking sector by September2014.3.7. Fiscal policy that potentially undermines the solvency of banksThe authorities commit to:1. Not take any fiscal policy actions that would undermine the solvency of banks(continuous).2. Not require banks to pay any dividends on preference shares, or fees or taxes in lieu ofthis, unless they have distributable profits (excluding profits from acquisitions and sellingof subsidiaries abroad), and the BoG has given its consent, confirming that such apayment would be compatible with the preservation of adequate capital buffers andliquidity going forward (continuous).3. Not impose unilateral debt relief solutions for any particular group of debtors(continuous).3.8. The loan and consignment fundThe Government commits to:1. Ensure that the Loan and Consignment Fund is not crowding out competition in thefinancial sector (continuous).2. Ensure that the commercial sector part of the Loan and Consignment Fund will be in agradual run-off. In that respect, the Government commits to revise the legal framework ofthe Loan and Consignment Fund to provide that its commercial sector part will not grantany new loans and will not take any new deposits, except the roll-over of existing deposits(April 2014).3. In consultation with the EC, to revise the legal framework of the Loan and ConsignmentFund regarding the scope of activities of the reserved sector part to ensure that it acts onlyin case of market failure by May 2014.3.9. Insurance Sector1. The BoG evaluated the capacity of the insurance sector to assume social security/pensionschemes, taking into consideration the under development Solvency II regime forinstitutions for occupational pensions (IORP Directive). In this regard, by June 2015, theBoG will establish a list of additional changes in legislation/structure of Greek insuranceindustry and the relevant legislation will be adopted.191
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OUTLINE OF THE REPORTEXECUTIVE SUMM
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LIST OF GRAPHSGraph 1. Economic cli
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ACKNOWLEDGEMENTSThe report was prep
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European CommissionThe Economic Adj
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1. INTRODUCTION1. INTRODUCTION1. Th
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2. MACROECONOMIC AND FINANCIAL DEVE
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2. Macroeconomic and financial deve
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Chart 3Graph 2.3. Exports of goods
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European CommissionThe Second Econo
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Chart 17Graph 11.1 labour reform in
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Chart 18Graph 13.1. Distance to Fro
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4. DEBT SUSTAINABILITY ANALYSIS AND
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4. Debt sustainability analysis and
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4. Debt sustainability analysis and
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Table 12. List of Milestones to be
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ANNEX 2: MACROECONOMIC FORECASTANNE
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ANNEXTable B1: USE AND SUPPLY OF GO
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ANNEXTable C1: FISCAL ACCOUNTS AND
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