22 November 2018

European Parliament: Draft interim report on the proposal for a Council Regulation on the establishment of the European Monetary Fund

• Suggests that the ESM be renamed not the European Monetary Fund (EMF) but the European Stability Fund (ESF), making it clear that the eurozone’s monetary policy remains the competence of the ECB.
• Highlights that the proper functioning of an EMU depends on the existence of an institution serving as a ‘lender of last resort’; acknowledges, in this context, the positive contribution of the ESM, despite its intergovernmental nature.
• Recalls its previous positions in favour of the incorporation of the ESM into the EU legal framework, which would make it a fully-fledged EU body; insists that this incorporation should continue to be understood as part of the EMU completion project.
• Notes that the Commission’s proposal has generated a lively discussion on its political, financial and legal implications, and that discussions continue on a number of important issues; stresses, however, that this debate on the long-term vision of the ESM’s institutional setting should not delay the steps urgently required to strengthen the EMU and its capacity to promote financial stability and respond to economic shocks.
• Underlines that the primary mission of the new ESF should continue to be to provide transitional financial assistance to Member States in need, on the basis of the agreed adjustment programmes; stresses that the ESF must have adequate firepower for that purpose; opposes, therefore, any attempt to turn the reformed ESM into an instrument for banks only, or to reduce its financial capacity to support Member States.
• Believes that the reformed ESM should play a more prominent role in the management of financial assistance programmes, alongside the Commission and in close cooperation with the ECB, ensuring that the EU institutional framework has more autonomy whenever needed, without prejudice to appropriate partnerships with other institutions, namely the International Monetary Fund.
• Stresses that evaluation of the financial assistance requests made by the ESF, as well as its decision-making on the design of the adjustment programmes, in cooperation with other institutions, should in no way replace, duplicate or overlap the normal macroeconomic and fiscal surveillance provided for in the EU’s financial rules and regulations, which must remain the Commission’s exclusive competence;
• Highlights the need for an efficient decision-making procedure in the reformed ESM, particularly in the case of urgent situations.
• Calls for a swift ESM reform that also redefines its role, functions and financial tools, so that the new ESF can offer liquidity support in case of resolution and serve as a financial backstop for the SRF.
• Underlines the risks arising from the delay in completing the banking union.

Full draft report

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