Deepening Economic and Monetary Union (EMU) to make it “fairer” and stronger internationally is one of the economic priorities of the Croatian Presidency of the Council of the European Union in the first half of 2020.
Recognising the need to act in parallel to reduce and share financial risks in the banking system, the Croatian authorities intend to take forward discussions on the existing legislative proposal to establish a European Deposit Insurance Scheme (EDIS) and the forthcoming legislative proposal to establish a fiscal capacity for the euro area from 2020.
At the same time, Zagreb stresses the need to continue work to prevent the future accumulation of non-performing loans (NPLs). If the European Parliament adopts its negotiating position, the Croatian Presidency will be able to start inter-institutional negotiations on stimulating secondary markets for NPLs (see EUROPE 12223/20) and/or the creation of an extra-judicial mechanism for the recovery of non-performing loans (see EUROPE 12378/14).
However, progress on deepening the EMU will depend above all on a possible agreement by the Eurogroup on the reform of the European Stability Mechanism, the permanent rescue fund for the euro area, and on the relaunch of political negotiations on the completion of the banking union.
After the failure in December (see EUROPE 12384/1), euro area Finance Ministers will try to get a clearer picture at their meeting scheduled for Monday 20 January. At the centre of the discussions was the position of Italy, which is hostile to the introduction of a risk for bank exposure to public debt.
On the fiscal front, the Croatian Presidency will lead the discussions in the EU Council within the framework of the 'European Semester' for 2020 that the European Commission initiated in December (see EUROPE 12392/13). Socio-economic policy recommendations will be established for each country, notably in light of the final fiscal data for 2019 expected in the spring.
See the economic priorities of the Croatian EU Council Presidency: http://bit.ly/2toY1xK (Original version in French by Mathieu Bion)