The executive director of the European Stability Mechanism (ESM), Klaus Regling, on Monday 24 January highlighted the possible evolution of the euro area’s permanent rescue fund in the context of a reform of the European economic governance framework.
The ESM could in particular set up “a central fiscal stabilisation capacity” to help a euro area country in difficulty, he told a conference on the reform of fiscal rules organised remotely by the ESM. In his view, the Covid-19 pandemic has shown the need for such an instrument, the Next Generation EU Recovery Plan is temporary, and Europe is not immune to a new exogenous macroeconomic shock.
Such a revolving fund would not require additional public money, he argued.
Mr Regling also reiterated his position in favour of integrating the ESM, an intergovernmental entity created in 2012 to respond to the euro area sovereign debt crisis, into the EU in the medium term. The best model is the European Investment Bank (EIB), which has its own protocol in the EU treaties, he said, preferring it to a secondary legal text that would incorporate the ESM into EU law.
Like the EIB, the ESM is based on capital from the Member States, has its own governance structure composed of the Finance Ministers of the euro area countries, and is active in the financial markets.
For the Executive Director of the ESM, this integration into EU law will only be possible through a more substantial reform of the Treaties, perhaps by following up on the recommendations that may emerge from the Conference on the Future of Europe.
In December 2017, the ‘Juncker’ Commission had proposed a draft regulation, requiring the unanimity of Member States, that aimed to transform the ESM into a ‘European Monetary Fund’ (EMF) (see EUROPE 11920/1). Such a proposal has not been successful to date.
The method proposed by the ESM has the advantage of “formalising” the role of the European Parliament in monitoring the activities of the rescue fund, while preserving the “legal autonomy” of the fund, said Marion Salines, deputy head of the ESM’s interinstitutional relations department. The ESM would not be affected by the “Meroni doctrine” on the delegation of powers to European agencies, she said. (Original version in French by Mathieu Bion)