What is happening in Europe with the ESM agreement

What is happening in Europe with the ESM agreement

Analysis of Giuseppe Literary

The end of the year following the Euros Summit, a summit of 19 heads of state addressing eurozone economic policy issues, was an opportunity for the ceremonial European Council to assess the situation and set goals. Next semester.

Charles Michel of Belgium delivered the keynote address on Friday 10 as President of the Euro Summit Ordinary letter from Pascal Donohue, President of Eurogroup, The second report on the “tasks” assigned by leaders to finance ministers last year and outlines the major challenges to be faced next year.

Many of the issues touched on by the Irish Minister, including the effect of the ESM Agreement, on its revised version, were signed by Plenipotentiary Ministers last January, and for its effectiveness, everyone needs a recognition law. 19 Eurozone states.

Donohuto defines the expected performance of the “parachute” loan, which can be disbursed by ESM to the Single Bank Resolution Fund from January 2022, when the fund set up by Adhoc with the contributions of all banks is exhausted. Eurozone. We are talking about a fund of about 50/60 billion, so we can get a loan from Mess with about the same amount if needed. This tool should be added as “It should come into force on the condition that all the state approvals procedures are completed”, But the fact that it is being proposed as one of the key goals achieved by the Eurogroup – albeit with a particular emphasis – suggests that it is merely a matter of formality. We went to check if they were nineteen Eight states have not yet ratified the treaty, including Italy and other heavyweights such as France and Germany.. We then held a quick vote among about a dozen of our MPs, to find out whether the bill for approval had been announced or the debate scheduled, and the answer was unanimous: no one knew anything.

Then, one of two things: either Donoho promised what he could not promise or someone from Rome promised to get approval on the toast thread to greet 2022. On the other hand, there is a July 2012 model. , Approval of the original treaty, after review by the Senate, was a system in place Camera In just three days between the Commission and the Assembly. Remember that these were the days of the Monty government and the expansion of 500 points.

However, the parachute lending device is only a Trojan horse that carries something else in its belly. In fact, the revised wording of the ESM also provides clear discipline of the two lines of credit that the ESM has the power to grant to states that have lost or risked access to markets: the precautionary credit line and the strengthened one. The requirements for access to the former are very strict, avoiding possible entry from Italy (today, and even from many other countries), which falls within the strong line of signing a macroeconomic adjustment program. The Greeks (but, at different levels, are well versed in Portuguese, Cypriots, Irish and Spanish).

The role of the modified mess is, above all, not to provide a parachute loan that is roughly equivalent to the equity of a bank like Intesa or Unicredit. It’s too small for a major bank to fail, too big to believe it’s needed so quickly. Ultimately, being alone can cause some anxiety.

The “headscarf” of mess recognition is at least something to be proud of, acknowledging the significant failure ahead of the banking union’s completion. Donova does not hide from European leaders that this is a complex and politically sensitive issue and that the activities of the year have yielded below the target. In the next semester. Keep in mind that in this discussion we are on the lookout, because the Germans expect government bonds on banks’ balance sheets to no longer be considered zero risk, and the expected repercussions on capital absorption.

On the leaders’ agenda, the Irish minister included two other divisive issues: the reform of the rules for public budgets and the relative orientation (expansion or regulation) for the next few years. First, for revision of the rules, Eurogroup will work on the Gottopardeska solution of the overall picture “streamlining and simplification”. Second, after reiterating that 2022 will be the last year of moderate expansion orientation, Eurogroup reiterates the Commission’s invitation for high-debt states. “Take steps to reduce current costs as requested by the Commission “. For growth, the recovery fund’s investments are adequate and extensive.

We fear that repairing the roof of the house will not be a good solution for our country while reducing the cost of food and heating at recurring costs.

(Extended and updated version of an article published in La Verita)

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