The European Stability Mechanism (ESM) reform is expected to dominate the agenda at the next rendezvous of the finance ministers of the euro area set for next Monday.
According to a European Union official who briefed journalists in Brussels, next week’s Eurogroup meeting in Luxembourg will cover automatic stabilisation and the role it can play if a financial crisis erupts in the bloc as well as building up stabilising reserves to act as an interconnection with the bloc’s fiscal stability rules.
Currency devaluations will also be on the table as the 19 ministers will set the criteria for the Enhanced Conditions Credit Line (ECCL). The ministers are expected to discuss a sustainable public debt and current account as well as a track record of international borrowing at reasonable terms and the fate f solvent banks that do not pose a threat to the Eurozone banking system.
“The general purpose is to keep access to the instrument open and easy, so that it really could be used,” according to a Eurozone official, “no concrete results will be available after the meeting, and the president will not be able to say much, but we are working towards December.”
The ESM now offers a Precautionary Conditioned Credit Line (PCCL) that is similar to a loan offered by the International Monetary Fund (IMF) and can be granted to a eurozone country with a sound economy.
Decisions on Greek pension cuts
December will also see shed light on whether much-needed pension cuts in Greece will be put in place in early 2019. The Greek proposals have not been tabled, as the deadline for the package of proposals and the draft budgetary plan’s deadline is in mid-October for all EU Member States.