30 October 2013

Handelsblatt: Eurozone finance ministers consider ESM overhaul

The plan would involve setting up a subsidiary fund to help banks located in non-eurozone countries that opt to participate in the Banking Union. However, such an arrangement would require a change to the ESM Treaty.

Translated from the German

The euro rescue fund ESM may undergo a major restructuring, reports the Handelsblatt. The eurozone finance ministers are considering relocating the ESM's bailout function to a subsidiary instrument. This ESM daughter would then be responsible for banks, both within and outside the eurozone, diplomatic sources told the Handelsblatt on Thursday. The aim was to make it possible to include non-euro area countries in the Banking Union. 

For the banks of these countries there is at present no safety net at European level: The ESM so far is an instrument to help eurozone banks alone. However, the European Banking Union is also open to non-euro countries. Poland, Denmark and other countries have informally indicated an interest in participating in the ECB's Banking Supervision and the new European resolution mechanism. For the banks of these countries however, a European fund would then also be required - and an ESM daughter could take on this task. 

The participating non-euro countries would then also have to contribute to the capital of the ESM daughter, of course - but this would include substantial amounts, it was said in Brussels. 

The biggest obstacle to this solution however is the fact that the ESM treaty would have to be changed. And that is met by considerable resistance, especially in Germany. 

Full article (in German)

© Handelsblatt