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EU finance ministers have agreed to reform the ESM’s euro rescue package. This was announced by Federal Minister of Finance Olaf Scholz (SPD). In the midst of the Crown recession, the euro zone wants to better arm itself for future financial and banking crises.
Scholz said the reform of the ESM sounds technical, but it is of great importance. »The reform of the ESM strengthens the euro and the entire European banking sector. Because we are further strengthening the euro zone against attacks by speculators, ”he said.
The finance ministers of the 19 euro states discussed the reform of the ESM together with their colleagues from the other EU states.
The reform should strengthen the ESM
The reform aims to strengthen the European Stability Mechanism (ESM) founded in 2012 and to facilitate preventive credit lines for states in economic and financial crisis. At the same time, the Luxembourg entity will assume the reinsurance function of the SRF bank resolution fund. This common endorsement will now begin two years earlier than originally thought, Scholz said. The start date is now 2022 instead of 2024.
This would make European banks “more crisis-proof,” Scholz said. It would also support the real economy. »Because a stable banking sector is an important prerequisite for growth and jobs in Europe. At the same time, we continue to reduce risks on bank balance sheets. All of this is excellent and important news for our companies and for the citizens of Europe, ”said the Federal Minister of Finance.
Italy had long blocked the reform that was ready for signature a year ago. At a hearing in the Italian parliament on Monday, Finance Minister Roberto Gualtieri signaled the approval of the reform package. Under Monday’s decision, the joint endorsement could be introduced before the originally planned 2024 date.
The economic situation is developing worse than expected
From the perspective of the International Monetary Fund (IMF), the economic situation in the euro zone is developing worse than expected a few weeks ago. Due to the second corona wave, the rally could be weaker in early 2021. Therefore, the IMF not only urged a quick start to the € 750 billion crown reconstruction program; The completion of the reform of the ESM and the strengthening of the bank resolution fund also remained urgent tasks, as stated.
Before reaching an agreement, the finance ministers of the euro countries discussed the economic situation of the countries that were particularly affected by the economic and financial crisis after 2008, including Greece. According to the EU Commission, its financial situation is not critical at the moment, despite the crown crisis. Based on this assessment, ministers came out in favor of releasing € 767 million in financial aid for Greece.
After the financial crisis, Greece was saved from bankruptcy with large loans from the ESM. The state is now financing itself again on the capital market, but must continue to meet strict creditors’ requirements.
