The Euro Area Summit, which will bring together the Heads of State or Government of the Twenty-Seven (all but the UK Prime Minister) on Friday 21 June, will take note of the progress made by Finance Ministers on deepening Economic and Monetary Union (EMU) and call on them to continue to make progress in this direction in the coming months.
This concerns in particular three topics: the future development of a fiscal capacity for the euro area, the reform of the statutes of the European Stability Mechanism (ESM) and the deepening of the Banking Union, with a focus on the creation of a European Deposit Insurance Scheme (EDIS).
That said, no revolutionary decision can be expected at this meeting, especially since the potentially long discussions of the previous day could overwhelm the leaders' willingness to talk too much on the subject (see other news). It therefore seems difficult to say with certainty whether real substantive discussions will take place or whether this euro area summit will be short and concise, or even whether a statement will be issued at the end of the meeting. But it is not the role of the leaders to reopen the subjects dealt with by the ministers.
The main aim will be to take note of the results recorded by the Eurogroup on 14 June in the early morning on these three issues (see EUROPE 12275/1). On 15 June, Mário Centeno, the President of the Eurogroup, sent a letter to Donald Tusk, the President of the European Council, informing him of progress at ministerial level. This is based on the mandate given by the same euro area summit to the Eurogroup last December (see EUROPE 12160/1). On the other hand, EU leaders should also invite the Finance Ministers of the Twenty-Seven to continue their work on this issue with a view to deepening the EMU.
Budgetary capacity. On the fiscal capacity side, Europe's Finance Ministers have agreed that this tool should support public investment and structural reforms in order to strengthen convergence and competitiveness in the euro area. There is therefore no question, for the time being, of setting up a stabilisation function, as wanted by Germany, Spain or France in particular.
However, at this stage, no agreement is on the table on the financial allocation of this future instrument – this issue being part of the negotiations on the 2021-2027 Multiannual Financial Framework (MFF), on how to finance it and on governance.
While it is not impossible for some delegations to take the floor on these aspects, it is not yet a question of relaunching the debate or reaching agreement.
Hence, a mandate should be given to the Eurogroup to continue its work on these points in the second half of the year. Negotiations in the coming months on the next MFF should be linked to this.
ESM. The Heads of State or Government of the Twenty-Seven will also take note of the agreement at the Eurogroup on the reform of the statutes of the ESM, the permanent rescue fund for the euro area. This will include making it the safety net of the Single Resolution Fund (SRF), no later than 2024, but potentially earlier, depending on the degree of financial risk reduction in the banking system.
It will also play an increasing role in crisis prevention and management, and the conditions for access to the ESM’s precautionary instruments (ECCL and PCCL credit lines) will be simplified.
A few minor points still need to be resolved. After the approval of the new statutes by the Euro Area Summit, the Eurogroup will have to work in the coming weeks on rewriting the guidelines surrounding the ESM, so that the Member States can start the ratification process of the future new treaty in December.
Banking union. Finally, leaders will note the limited progress made in the framework of the High Level Working Group on EDIS.
The Eurogroup will be invited to continue its work in this direction, in particular in order to set up a roadmap for starting political negotiations.
The Commission is still in favour of a stabilisation function. On a trip to Sintra, Portugal on Wednesday 19 June for a Forum organised by the European Central Bank to mark the 20th anniversary of EMU, the President of the European Commission, Jean-Claude Juncker, recalled the Commission's vision for the deepening of monetary union.
“We need a European Deposit Guarantee Fund to complement the Banking Union, we need simpler budgetary rules and a stabilisation function [within the framework of budgetary capacity] for the euro area”, he said, before adding that “and we need to set up a common ‘Treasury’ and develop a risk-free European asset in the future”. (Original version in French by Lucas Tripoteau)