Last night’s Eurogroup agreement ends a year-long blockage that will finally update the European Stability Mechanism (ESM) by improving the credit lines available for euro countries and turning the ESM into a fiscal backstop for the Single Resolution Fund for helping resolve banks by January 2022. Reacting to the agreement Jonás Fernández MEP, S&D spokesperson for economic and monetary affairs, stated:
“We congratulate the Eurogroup on last night’s breakthrough on reforming the European Stability Mechanism. The European Parliament has been requesting the Council swiftly implement the Single Resolution Fund backstop for a long time. Last night’s decision is an important step, especially in the context of the current crisis. The work carried out in the context of the Next Generation EU, and specifically with the issuance of recovery bonds, provides countries with economic support to improve their health and education systems. As a consequence of the Covid-19 pandemic banks are coming under pressure - we have to expect the amount of non-performing loans to increase. With the backstop we will be better prepared for dealing with eventual bank failures even if banks today are stronger and more resilient compared to the last crisis. It is only a pity that it took the Council so long to progress on the file, which might seem technical but can prevent damage to people and businesses.
“On the back of this recent success, I encourage the Council to now move on the creation of a European deposit insurance scheme and completing the Banking Union.”