The president of the Eurogroup, Mário Centeno, said he was “confident” on Monday 16 March that the euro-area finance Ministers will soon be able to “close this big chapter” of reforming the European Stability Mechanism (ESM), the euro area’s permanent rescue fund.
The work carried out by national experts is helping to clarify the legal issues still open, Mr Centeno said, expecting a final agreement once the coronavirus crisis has been overcome.
The ongoing reform will give more power to the ESM in the event of a macroeconomic crisis. A euro-area country that appeals for financial assistance will not be subject to an automatic restructuring of its public debt. If this is the case, provision is made to facilitate such restructuring.
One of the issues to be decided was the question of including, in an annex to the revised Treaty on the ESM, the modalities for the operation of collective action clauses (CACs) drafted in sovereign debt issuance contracts. These clauses should make it easier to subject recalcitrant creditors to the restructuring of a country’s debt. (Original version in French by Mathieu Bion)