Representatives of 19 Eurozone member states on 27 January officially officially approved Modification of the European Stability Mechanism ESM, also known as the “Save State Fund”.

Note: We are talking about the Mess as a whole, not the new device Pandemic Crisis Support, Created specifically to respond to the Kovid-19 Pandemic. This new credit card, which has been much talked about in recent months, guarantees loans to states that make unconditional requests, and that this money is being used for health care costs related to the Pandemic Emergency and that their amount does not exceed two percent of GDP in 2019.

Decision of January 27thEuro Group (Meeting of the Ministers of Economy of the Eurozone Countries) November 2020, Accepted From the Euro Summit in December 2020 (the meeting of heads of state and government of the eurozone countries), the process of ratification by EU institutions is coming to an end.

Now the ball Is going According to the respective constitutional procedures, the individual states are required by their parliaments to approve an international agreement incorporating the reform of the ESM. Reform Will come into effect Once everything is approved. Even if the president of the Eurogroup – Irish Pascal Donoho – has no time limit. He expected It takes place by the end of the year for the reform to take effect in 2022. As some examples show (e.g. Agrees Of the Lisbon Treaty of Ireland), hits and delays are possible. Many European countries, for example Germany and the Netherlands, will go to the polls in 2021.

So let’s take a brief look at what the reform offers.

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Contents of the update

Come on We wrote In the past, the ESM update included five major changes.

First, ESM has the potential to act as a “backstop” for single-resolution funds (FSRs) funded by banks in 19 eurozone states aimed at resolving banking crises. Once the FSR is paid, the ESM can be acquired. Ula hackers discourage any attack on European banks.

The second novelty is that in the future ESM will play a major role in lending to troubled states. Third, the tools for ESMs to intervene to help a country in distress are changing, especially as access to precautionary credit lines facilitates states whose accounts are in order.

Fourth, ESM can mediate between states and private investors if a public debt restructuring is required. Fifth, from 2022 onwards, public debt securities in euro area countries will no longer have a double, but majority collective action clause (CAC). This means that if a state has to repay the debt and restructure public debt – for example, by offering a percentage of the value of the bonds to the debtor to repay it – the subdivision of securities (e.g. three-year, five-year, ten-year bonds, etc.) no longer needs to be given the green light, but the public A majority vote of all owners of debt securities will suffice.

The “strange” position of Forza Italia

The ESM reform has not yet been approved by the Italian parliament, but is due on December 9, 2020 Deputies e Senators At the Euros summit on December 11, a majority voted in favor of Italy’s approval of the reform.

And Forsa Italia On the sides No, the brothers and Lega in Italy. The party was deployed by its leader, Silvio Berlusconi, in direct opposition, citing two reasons: First, with the reform, “decisions on the use of funds will be made by the majority of states.” This means that money paid by Italy can be used elsewhere against the will of Italy. The second is that with the new MES, “the European Parliament will have no control and will ask the European Commission to play a fully notarized role.”

However, as we examined then, both of these reasons were unfounded.

The ESM reform will not change the voting system for disbursing loans to states. Decisions are usually made “by consensus”, with no state expressing opposition (which gives veto rights to all 19 countries in the eurozone). In emergencies, decisions are made with an 85 percent majority, but since Italy has a whopping 17 percent of the vote, there will be a veto right even in this case. In short, whether Italy pays or not – there is no risk that MES money will be used against the Italian will.

Second, it is true that the European Parliament does not have oversight powers, but this is not new to the reform, and has been the case before. It is also true that MES increases the decision-making burden, but the Commission retains considerable power. So it is an exaggeration to say that this is a completely notarial role.

In conclusion

The ESM reform process within EU institutions ended on 27 January with the approval of the representatives of the 19 member states of the Euro. Now the word has been passed to the national parliaments, which have to ratify the treaty, so it will come into force when all the legislatures in the 19 states approve it.

The five key findings of the reform are the “backstop” function of ESM towards the Single Resolution Fund (FSR), the large role of ESM in lending and management, the review of certain ESM instruments, and the mediation between states and private investors in the case of debt restructuring. Role, and finally, the revision of the Joint Action Clauses (CAC) of Debt Securities in Euro Area States, from a double majority to a single majority.

As we have seen, it is not true that the risk of non-veto authorization in lending to Italy works with the reform, and it is exaggerated to argue that the Commission has been reduced to a “completely notarial role”. These are the reasons given by Berlusconi to justify Forza Italia’s opposition to the reform at the end of 2020.