Luxembourg/Brussels, 14/09/2015 (Agence Europe) - Starting in January 2016, eurozone nations will set up credit lines to provide the single resolution fund (SRF) with the firepower it needs during the phase-in stage.
This was the preferred option of the Ecofin Council in Luxembourg on Saturday 12 September. After an exchange of views, the Luxembourg Presidency of the Council of the EU noted that eurozone nations were not prepared to amend the treaty on the European Stability Mechanism (ESM), the eurozone's permanent bailout fund. The presidency asked the EFC group of member states' experts to examine the option of national credit lines as an interim solution ahead of a report to the European finance ministers on 5 and 6 October.
A large majority of countries favour the establishment of a credit line from the ESM to the SRF, the financial arm of Banking Union, to enable the SRF to build up €55 billion in 2016-2023 (1% of the covered bank deposits). France hopes, however, that this option, which would have the advantage of breaking the connection between bank crisis and debt crises, could be achieved by 2017.
Germany is fiercely opposed to this option but German finance minister Wolfgang Schäuble said during the debate that he could support an informal credit line to be provided by each member state for their own compartment. He said one couldn't talk about changing the treaty during the SRF interim phase. Finland and Slovakia back Germany's line.
The SRF would be gradually pooled, but would initially comprise individual national compartments financed by the member states from contributions from their banks.
The Ecofin Council's 2013 agreement in principle establishing the single resolution mechanism foresees a decision before the end of 2015 on bridge financing for the SRF during its eight-year phase-in (see EUROPE 11386). (Mathieu Bion)