On Monday 12 March, the French finance minister, Bruno Le Maire, said that France and Germany would be able to make proposals on the deepening of Economic and Monetary Union (EMU) by the Eurozone summit of Friday 23 March.
“There has never been any question of anything else”, said Le Maire, hitting back at suggestions to the contrary that have appeared in the German press. I will receive my opposite number, Olaf Scholz, in Paris this Friday to prepare for the Eurozone summit and to give a proposed roadmap to the French President, Emmanuel Macron, and the German Chancellor, Angela Merkel, the minister said.
Le Maire used the political and commercial current situation in support of his comments. “When you see the political situation in certain countries (such as Italy: Ed) and the risk of trade war, which will be lose-lose, what conclusions are you going to draw? There is an absolutely urgent need to move forward in the integration of the Eurozone”.
On Monday, the European finance ministers once again discussed the deepening of the EMU ahead of the Eurozone summit on Friday 23 March. The questions presented as the most mature concern, firstly, converting the European Stability Mechanism (ESM), the permanent bailout fund of the Eurozone, into a European Monetary Fund (EMF) and, secondly, the completion of the Banking Union in the Eurozone, with the creation of the European deposit insurance system (EDIS) and a backstop for the Single Resolution Fund.
However, concrete progress is being hindered by the desire of Germany, the Netherlands and the Nordic countries to make concrete progress first of all on reducing financial risks, such as the package on the revision of the prudential banking rules to be discussed by the Ecofin Council this Tuesday, with no guarantee of an agreement (see other article).
In a composition unveiled last week, the finance ministers of six Eurozone countries (Estonia, Ireland, Finland, Latvia, Lithuania and the Netherlands), plus Denmark and Sweden, state that political discussions on the first phase of EDIS may start once sufficient progress has been made on risk reduction.
This progress can be measured, for instance, in headway towards building liquidity buffers that can be mobilised in the event of a bail-in, compulsory liquidity provisioning to deal with non-performing loans (NPL) and specific regulatory treatment for banks' exposure to the sovereign risk (currently considered zero under European law). According to these eight countries, the EMF, which should remain within the governing inter-governmental scope, should have increased competences to oversee the bailout plans of the Eurozone countries and a framework for an orderly restructuring of the sovereign debt of countries in difficulties. (Original version in French by Mathieu Bion)