The rejection of the proposal by the Italian Parliament provoked the anger of Brussels, which could no longer advance the reform because of our no decision. Eurogroup President Paschal Donohoe stated that he was “saddened” by the result and that Italy “remains the only country blocking” the vehicle reform and that this is “regrettable”. “I took note of today’s vote of the Italian Parliament on the approval of the ESM Agreement. While I fully respect the parliamentary negotiations, I regret the outcome,” wrote the president of the parliament, which brought together 20 countries with a single agreement. currency unit.
The European Equality Mechanism (also known as ESM or ESM in English) is an intergovernmental body in the euro area established in 2012 with the task of responding to financial crises linked to sovereign debt and the banking system. The agreement prevents financial “contagion” from spreading across the eurozone by pooling resources (80 billion) that can be used if a member country finds itself in a difficult situation.
The use of the ESM is not mandatory, but must be requested by the country itself, and that is why Brussels is angry with Rome for not wanting to green light the reform of an instrument it absolutely does not have to use. However, it was necessary to give the official green light in the Parliament, and it was expected that our country would get the green light in Europe by getting approval from the EU Council in January 2021 during the second Conte government.
“As I have underlined many times, completing the ESM Treaty reform is an important element of our common safety net in the euro area, to the benefit of all euro area member states,” Donohoe said. Reminding that “Italy remains the only country that prevents the completion of the reform to which we all committed in 2021,” including Italy, the president stated that “it is regrettable that we have not succeeded in establishing Italy.” “The backstop is an important milestone in completing the Banking Union in the EU,” he said. The backstop is a kind of fiscal parachute fed by annual contributions from the banking sector in the Resolution Fund for financial institutions, which is one of the key points of the reform. To overcome the impasse, Donohoe said “I will continue to engage with Italian authorities on this front in the coming months,” he said.
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Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
