Monday

22nd Apr 2019

Eurozone to launch new rescue fund

  • The ESM will move into this building early next year (Photo: Valentina Pop)

Eurozone finance ministers meeting in Luxembourg on Monday (8 October) will hold the inaugural session of the permanent bailout fund, the European Stability Mechanism (ESM), which is to have a firepower of €500bn by next year as countries gradually pay into it..

The fund should have already been operational on 1 July, but constitutional challenges in Germany delayed the launch by three months.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

For now, its headquarters remain within the European Financial Stability Facility (EFSF), a temporary fund set up in 2010 and located in an office building in Luxembourg. Both will move to a bigger nearby location early next year.

Klaus Regling, a German finance official who also worked in the EU commission and is currently in charge of the EFSF, will head up the fund.

But all decisions will be taken by the board of governors, consisting of finance ministers from the 17 eurozone countries. The voting system reflects the share of paid-in capital to the fund, meaning that Germany can veto decisions.

Spain meanwhile is still "considering" formally asking for financial assistance in a bid to lower its borrowing costs. This would take the form of bond-buying by both the ESM and the European Central Bank.

The ESM can buy the bonds of a country only if the country signs up to deadlines for reforms. The ECB, unlike the ESM, can buy unlimited amounts of Spanish bonds, but has also warned that if the country does not stick to the promised reforms, it will halt the purchases.

Ministers are also likely to look at the issue of the ESM being used to directly fund ailing banks in the eurozone. A deal in June said that once a eurozone-only banking supervisor is in place, banks can tap the ESM directly. The move is again aimed at lifting the debt and deficit burden off Spain, whose banks are in need of €60bn.

But Germany, the Netherlands and Finland last week said in a joint letter that no 'legacy assets' should be put on the ESM books, meaning that the €60bn would stay on the Spanish government's books.

Talks will also continue on the banking union and the relation of non-eurozone banks to the new supervisory authority within the euro-area.

Sighs of relief as German court approves bailout fund

Markets and EU politicians breathed sighs of relief as Germany's top court rejected challenges brought against the eurozone's upcoming bailout fund. Any increase in Berlin's contribution will need parliamentary approval, however.

Lobby register transparency talks collapse

Efforts to set up a better transparency register for lobbyists have collapsed after two years of talks. The impasse revolves around the European Commission's insistence that the register also become mandatory for the European Parliament and Council.

Exclusive

EU bodies dodge questions on secret VW loan report

The European Anti-Fraud Office (Olaf) and the European Investment Bank (EIB) have refused to answer detailed questions about the demand from the European Ombudsman to publish an Olaf report on a €400m EIB loan Volkswagen Group (VW) received through deception.

Magazine

The changing of the guards in the EU in 2019

The four most powerful EU institutions - Commission, Parliament, Council and Central Bank will all have new leaders in the coming ten months. Here is an overview.

Magazine

Explained: What is the European Parliament?

While domestic political parties often use the European Parliament as a dumping ground for unwanted politicians - and a majority of citizens don't bother to vote - the parliament, over the years, has become a dominant force in the EU.

Stakeholders' Highlights

  1. Counter BalanceSign the petition to help reform the EU’s Bank
  2. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  3. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  4. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  5. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  6. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  7. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  8. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  9. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  10. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  11. Nordic Council of MinistersNordic commitment to driving global gender equality
  12. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan

Latest News

  1. Romania drafts EU code on NGO migrant rescues
  2. Bulgaria, Hungary, and Malta shamed on press unfreedom
  3. EU drafts $20bn US sanctions list in aviation dispute
  4. Brunei defends stoning to death of gay men in EU letter
  5. US Democrats side with Ireland on Brexit
  6. Wifi or 5G to connect EU cars? MEPs weigh in
  7. How Brexit may harm the new EU parliament
  8. EU parliament backs whistleblower law

Join EUobserver

Support quality EU news

Join us