At the end of the Eurogroup meeting on Friday 28 April, the executive director of the ‘European Stability Mechanism’ (ESM), Pierre Gramegna, stressed the importance of finalising the ratification of the revision of the treaty establishing the permanent rescue fund for the euro area.
“There is a problem of timing. (...) It is therefore crucial that the revised treaty enters into force, together with the safety net, before the end of this year”, he said.
By the end of 2020, the euro area countries had reached a political agreement on revising the international intergovernmental treaty establishing the ESM to, among other things, allow it to act as a ‘backstop’ for the ‘Single Resolution Fund’ (SRF), the financial arm of the resolution component within the banking union (see EUROPE 12613/4).
However, at the end of 2023, specific “temporary arrangements” for the safety net will expire and risk complicating the situation, if ratification is not finalised, Mr Gramegna added.
Only Italy has not ratified the revised ESM treaty. The issue is very sensitive in this Member State where the dominant parties in the governing coalition, Fratelli d'Italia and La Lega, have always campaigned against the euro area bailout fund, accused of imposing austerity on countries that have been financially rescued. Italian Prime Minister Giorgia Meloni is calling for the file to be reopened to develop the role of the ESM before any ratification is considered.
Mr Gramegna pointed out that he had launched a reflection with euro area countries on a new strategy for the rescue fund, with Italy playing a leading role in this debate.
Ratification of the revised ESM treaty “would open up the possibility for other countries to call on it” in the event of a macroeconomic crisis, noted Eurogroup President Paschal Donohoe.
On Friday, the French and Spanish Finance Ministers noted the effective protection that the ESM and SRF provide to the Eurozone. (Original version in French by Mathieu Bion)