On Monday 12 May, the Finance Ministers of the euro area countries will review the functioning of the banking union, prepare for the annual meeting of the European Stability Mechanism (ESM), the euro area’s permanent rescue fund, and discuss the European Central Bank’s (ECB) digital euro project.
In the ‘banking union’ format, the Ministers will be briefed by the Chairwoman of the ECB’s Single Supervision Mechanism (SSM), Claudia Buch, on the situation in the banking sector at a time when the US threat to impose tariffs on the European Union has caused volatility in listed bank stocks. For his part, the Chairman of the Single Resolution Mechanism (SRM), Dominique Laboureix, will outline to the Ministers the work being done to make operational the resolution plans for banks falling within the remit of the European authority responsible for resolving large failing banks.
The ‘CMDI’ legislative package, currently under negotiation between the European Parliament and the Council of the EU, could also be discussed. The interinstitutional negotiations are progressing “much more slowly than we had hoped”, said a European source on Thursday 8 May. In addition, the source added, the Ministers will consider “the right balance” between regulatory simplification at EU level and maintaining effective prudential regulation.
ESM. The Eurogroup will then prepare for the annual meeting of the ESM on Thursday 19 June in Luxembourg.
Three topics will be on the agenda next Monday: – the revision of the distribution key for the capital of the rescue fund; – the entry into force, blocked by Italy, of the agreement revising the treaty establishing the ESM, in particular by making the ESM the backstop of the Single Resolution Fund (SRF); – an assessment of the tools available to the ESM to help euro area countries in difficulty.
No surprises are expected on the Italian side. According to this source, the ESM experts are working on new tools that could be put in place either on the basis of the same treaty or after a new revision of the treaty establishing the ESM.
It should be noted that the European Commission may give the Ministers the first look at the spring economic forecasts, which it will unveil on Friday 16 May.
Digital euro. Finally, in an inclusive format, the Ministers will exchange their impressions gathered at the recent IMF and World Bank spring meetings, with a view to coordinating their action at international level.
Referring to fruitful discussions held with private financial players on the fringes of these meetings, this source wanted to believe that investors are looking for a compass for their investment decisions in a context marked by high macroeconomic uncertainty.
These players see the euro area and the EU as “a point of reference” conducive to stability and predictability, noted the source. It’s up to us to seize this opportunity to move forward on projects that strengthen Europe’s attractiveness and sovereignty, the source added. According to this source, at a time when the United States is taking the lead in the field of stable coins, the affirmation of European payment systems through the creation of a digital euro is a major challenge. (Original version in French by Mathieu Bion)