At a conference in Brussels on Tuesday 10 April on the creation of a European Monetary Fund (EMF), the Executive Director of the European Stability Mechanism (ESM), Klaus Regling, made the case for the international organisation to retain its own functioning and equity, remaining answerable only to its shareholders, the Eurozone countries.
In so doing, Regling distanced himself from the European Commission's proposed position from the end of 2017, which, in the framework of a broader package on the deepening of Economic and Monetary Union (EMU), calls for a European Monetary Fund (EMF) to be created within the Community framework (see EUROPE 11920).
Although he stressed that he had always been in favour of the Eurozone's permanent bailout fund becoming progressively incorporated into the EU treaties, he considers that this should be done on the model of the European Investment Bank (EIB), “with its own protocol, its own capital and accountability to its shareholders”. This position requires treaty change. Regling therefore takes the view that pending this treaty change, the ESM should remain an international organisation regularly addressing the European Parliament.
He also referred to the development of the role of the ESM within the Eurozone. “The ESM is now more closely involved in the design of the financial aspects of the bailout programmes of the Eurozone countries”, he stressed. He also highlighted the fact that the International Monetary Fund (IMF) has lost a certain amount of influence in the various programmes over the years.
He argued that “it seems reasonable that the ESM and the European Commission in the future will be jointly responsible for designing, negotiating and monitoring assistance programmes”, even though neither should lose any competences. For instance, he does not wish the ESM to take on an economic policy coordination role in the framework of the Stability and Growth Pact.
A budgetary capacity built into the ESM. Among the future functions of the organisation, Regling also said that he was in favour of a common backstop of the Single Resolution Fund in the form of a line of credit of the ESM and the creation of a limited fiscal capacity for the Eurozone, integrated in the ESM, to reinforce macro-economic stabilisation. Although this budgetary line is currently the subject of differences of opinion between European leaders (see EUROPE 11988), Regling sees it as an opportunity.
Finally, the Executive Director of the ESM considers that the fund should be able to manage a sovereign debt restructuring framework. However, he considers that there should be no automatic extension of the maturities of sovereign debt instruments, as called for by the former German finance minister, Wolfgang Schäuble (see EUROPE 11880). (Original version in French by Lucas Tripoteau)