On Friday 7 September, the European finance ministers will discuss the key questions concerning the future common backstop of the Single Resolution Fund (SRF), a role that will be played by the European Stability Mechanism (ESM).
This issue will be the central focus of the discussions between the EU financial policymakers to take place in Vienna. This exchange at the Eurogroup will take place in enlarged format, to be attended by 27 ministers (all but the British minister).
At the most recent Eurozone summit in Brussels at the end of June, the heads of state or government set an agenda for the deepening of Economic and Monetary Union (EMU) (see EUROPE 12052). At that meeting, they gave the Eurogroup a mandate to work on the completion of Banking Union and the creation of a fiscal capacity for the Eurozone, in the course of the second half of 2018.
Four sequences will set the pace of the next few Eurogroup meetings, with a final meeting in December that will aim to present the results of the work as a whole. The four key points concern: - this backstop for the SRF; - the future architecture of the ESM; - the creation of the European Deposit Insurance Scheme (EDIS), the third pillar of Banking Union; - the creation of a fiscal capacity for the Eurozone. These subjects partly echo the Commission's proposals of December 2017 on the deepening of the EMU (see EUROPE 11920).
Meeting for a working lunch in Paris on Tuesday 4 September, the finance ministers of France, Bruno Le Maire, and Spain, Nadia Calviño, reiterated their commitment to ensure that “concrete and operational” decisions are made at the December Eurozone summit.
Although three Eurogroup meetings have officially been scheduled ahead of the December meeting, it is not impossible that a fourth will be arranged.
On setting in place the backstop for the SRF, the aim is to present the 'terms of reference' before the end of the year.
There has been no substantial progress to report on this issue since the July Eurogroup meeting (see EUROPE 12062). It has been noted that the ESM will play this role and that the backstop will take the form of a neutral and renewable credit line, reimbursable by the private sector contributors over a period of three years (with a possible two extra years). Its level may be in the region of €50 or €60 billion.
Initially, the aim will be to agree on the decision-making process, so that rapid action can be taken in the event of crisis, whilst respecting the prerogatives of the national parliaments, with a logic of balance between effectiveness and democratic legitimacy. In particular, Berlin has called for the Bundestag, the lower house of the German parliament, to have a right of scrutiny.
The date on which this backstop goes live also remains to be decided upon, with the absolute deadline having been set at 2024, when the build-up of the SRF fund is due to complete. France and Germany have jointly suggested that a decision be made in 2021, on the condition, amongst others, that the level of non-performing loans has fallen by a sufficient degree.
Although the ministerial discussions will be substantial and the positions of the member states seem to be moving closer together, no decision will be made in Vienna, as the plan is to present all the work results in December.
Portugal – labour and product markets. The Commission and the ECB will present the Eurozone finance ministers with the results of the eighth post-aid plan monitoring mission in Portugal, which took place in June.
In its classic format, the Eurogroup will also hold an exchange on the policies for labour and product markets. It will also discuss the challenges of the European economy with Roberto Gualtieri (S&D, Italy), the chair of the economic and monetary affairs committee of the European Parliament. (Original version in French by Lucas Tripoteau)