The amendment of the European Stability Mechanism

Abstract

The depth of the economic crisis that began in 208 led to financial stabilization instruments in the European Union (EU). After a period of transience and provisionally, the European Stabilization Mechanism (ESM) allowed the Economic and Monetary Union (EMU) countries to consolidate a permanent financial assistance fund. In 2017, the Commission proposed revising the ESM to revoke its international organizational character and transform it into an EU agency included in the EU's institutional structure. The strong opposition of some Member States (MS) has avoided this possibility. The ESM Treaty has been revised and signed by the Eurozone states and maintains its intergovernmental nature. In any case, some new functions have been added, including its establishment as the Single Resolution Fund (SRF) backstop facility only in case of extreme need and when its liquidity is insufficient. Creating this support to the SRF is essential for consolidating the Banking Union.