The XNUMX-XNUMX business days back to the charge on European Stability Mechanism (ESM). In the Eurogroup meeting held yesterday, many ministers returned to put pressure on Italy, asking the number one of Economy Giancarlo Giorgetti, when our country will ratify the treaty, unlocking resources that could be useful to all the countries of the Eurozone in the event of a crisis.
Italy, in fact, remains the only country that has not ratified the bailout fund and until it does, the mechanism cannot come into force.
Mes: Eurogroup pressuring Italy
The Single Resolution Board, the EU body that deals with the resolution of banks in crisis, has launched a call to ratify the reform of the treaty on the European Stability Mechanism (ESM). The exhortation is contained in a document presented at the Eurogroup, formally addressed to "all countries", but which in fact has a single addressee: Italy, the only country that has not ratified the treaty to date.
“All countries – the SRB states – should urgently ratify the revision of the ESM Treaty to establish the Mechanism’s common backstop to the Single Resolution Fund”. According to the SRB, “having adequate sources of funding in the event of a crisis is more important than ever in these volatile times. This support – it states – should be complemented by public liquidity support to address the potential needs of the largest banks in the Banking Union”.
Up to this point, Italy has always refused to sign the reform of the bailout fund, an instrument that should be triggered when a country is in an extremely critical financial situation, providing loans, but also committing the creditor to a program of reforms and cuts in public spending. The issue has animated long debates in Parliament in recent months, with a part of the opposition that has pressed the majority on the lack of ratification.
“A large number of finance ministers, around ten, spoke during the meeting and all reiterated the importance of ratifying the ESM,” said qualified sources present at the meeting on 12 May.
Dombrovskis: “The ESM is important”. Giorgetti: “There are no numbers in Parliament”
“It is important – said the Commissioner for Economic Affairs, Valdis Dombrovskis – finalize the ratification of the revised treaty, in particular for the “backstop” function, i.e. the financial safety net.
“If the ESM treaty is not applied, it will not be able to play an active role in the event of financial difficulties caused by a banking problem,” added the Eurogroup President., Irishman Pascal Donohoe.
For his part, the Minister of Economy, Giancarlo Giorgetti, reiterated to his Eurozone colleagues “that Parliament is sovereign and that the numbers do not exist”. An answer also confirmed by Donohoe. The Italian minister admitted “once again the considerable difficulty encountered with the ratification of the ESM reform treaty by the Italian Parliament. We respect and understand it”, he said, even if “the numerous speakers who intervened strongly underlined its importance and the role it plays for our economic stability”, he continued.
He also spoke on the issue Pierre Gramegna, the director of the Mechanism, according to which without the protection of the ESM “the attractiveness of European banks is weakened and foreign investors’ views on operations in the euro area are influenced”. “A banking union disadvantaged compared to other jurisdictions due to the lack of a common backstop weakens the attractiveness of European banks and influences foreign investors’ views on operations in the euro area”, he then added.
