After a 19-hour ministerial discussion-level discussion, a watered-down agreement concerning reforms of the European Economic and Monetary Union (EMU) was finally hammered out as a compromise ahead of an upcoming Euro Summit as it only focused on the banking union and the sovereign bailout fund which are aimed at protecting the common currency union from a future financial crisis
After rounds of extensive redrafting to reach an agreement that would keep the EU institutions, France, Germany, the Netherlands, and Italy on board, Eurogroup President Mario Centeno, European Commissioner for Economic Affairs Pierre Moscovici, and President of the European Stability Mechanism (ESM) Klaus Regling announced that a consensus had been reached to introduce new rules by 2022 to facilitate the restructuring of the public debt after the Eurogroup opted to endorse the principle of inserting a “collective action clause” into European bond contracts as a means to avoid a debt restructuring agreement from being blocked by refractory investors who would demand a privileged treatment.
The discussion over the Eurozone budget seems to have been the most controversial with both France and Germany pushing for a common budget proposal that would help finance economic convergence between countries in the eurozone and could also serve to stabilise the economic system in the event of a shock.
The ministers present at the talks agreed to designate the Single Resolution Fund as a financial backstop for the ESM when it comes to bank resolutions. Part of the agreement also includes a pledge to improve the eligibility process for precautionary credit lines, with a strong emphasis on complying with the benchmarks of the Eurozone’s fiscal rules.
- The Eurogroup also announced that it would start a new high-level working group to boost the European Deposit Insurance Scheme, which would provide a stronger and more uniform degree of insurance coverage in the Eurozone for all deposits of up to €100,000.
A final agreement on how to respond to the US’ taxation of digital giants went unanswered, though the French minister submitted a new proposal that would impose a similar digital tax, which was met by stiff opposition by Ireland, Denmark, Sweden, and Finland. Germany, which has its own misgivings about hitting digital companies with additional duties said it backs Paris’ proposal to introduce a 3% tax under the condition that it would be applied to advertising turnover.