Future of the ESM

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The introduction of the Pandemic Crisis Support credit line forms part of the policy response to combat the effects of the pandemic while the reform of the ESM Treaty strengthens the resilience and crisis resolution capacities of the euro area.

With the enhanced mandate, both the ESM and the euro area begin a new chapter, emerging better equipped from the current crisis to tackle any future ones.

Scroll through the thoughts shared by our institutional peers from the European Commission, the EIB, the ECB, the IMF, the SRB, and the President of the Eurogroup on future collaboration with the ESM and on working together to strengthen crisis prevention.

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Why is the ESM Treaty reform so important at this stage?

“The unprecedented circumstances of the past year have illustrated how essential it is that our shared European structures are capable of meeting the common challenges we face. The enhanced ESM mandate will strengthen the resilience of the euro area by improving its ability to prevent and resolve any future crises.”

PASCHAL DONOHOE

President, Eurogroup

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What is the importance of the ESM Treaty reform for euro area financial stability?

“The ESM Treaty reform is a major step for financial stability in the euro area. As the backstop to the Single Resolution Fund, the ESM strengthens the bank resolution framework and helps safeguard financial stability. It is another crucial milestone towards the completion of our banking union.”

CHRISTINE LAGARDE

President, European Central Bank

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How will the ESM and the Commission work together going forward?

“In 2020, the ESM and the European Commission worked intensively together to create the Pandemic Crisis Support in response to the Covid-19 emergency. In just a few weeks last spring, we were able to develop a new instrument of solidarity, without macro-conditionality, which remains available to all euro area member states. I look forward to continuing our excellent cooperation.”

PAOLO GENTILONI

Commissioner for Economy, European Commission

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What would be the backstop’s main contribution to the Single Resolution Board’s future operation?

“The backstop reinforces the resilience of the bank crisis management framework by establishing a last resort credit line to the Single Resolution Fund that is designed to be fiscally neutral. As of 2022, we will ensure operational readiness so funds can be drawn, if conditions are met. This will enable us to address bank failures, while limiting impacts on the economy, public finance, and financial stability.”

ELKE KÖNIG

Chair, Single Resolution Board

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How do you envisage cooperation among the ESM, other Regional Financing Arrangements (RFAs), and the IMF going forward?

“The IMF has worked closely with the ESM and other RFAs in recent years to strengthen the global financial safety net. We will continue this cooperation to best serve our members, especially during a period of tremendous social and economic challenges posed by the pandemic.”

KRISTALINA GEORGIEVA

Managing Director, International Monetary Fund

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How will the ESM contribute to making Economic and Monetary Union more robust and resilient?

“The ESM reform is an important step forward in how the European Commission and the ESM work together. The new treaty will allow both sides to be more involved in the work directly affecting the safety of ESM funds. It will help us to serve the euro area’s economy and people even better – together. Along with the more accessible precautionary credit line and early introduction of the backstop, this is all excellent news for the euro area.”

VALDIS DOMBROVSKIS

Executive Vice-President, European Commission

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How do you envisage the European institutions together building a stronger Europe?

“While still being a young sister institution, the ESM is a crucial pillar of the European financial architecture. The backstop that it provides ensures the integrity of the eurozone and the internal market. It improves the lives of EU citizens and facilitates the EIB’s role to invest in Europe’s future.”

WERNER HOYER

President, European Investment Bank