Eurogroup agrees on reform of the European Stability Mechanism and the early introduction of the backstop to the Single Resolution Fund
Yesterday, on 30 November, the Eurogroup agreed to proceed with the reform of the European Stability Mechanism (ESM), to sign the revised Treaty in January 2021 and to launch the ratification process. It also agreed to advance by the beginning of 2022 the entry into force of the common backstop to the Single Resolution Fund (SRF), a credit line from the ESM to replace the Direct Recapitalisation Instrument (DRI). These reforms aim to strengthen the resilience and crisis resolution capacities of the euro area.
In its statement announcing the agreement, the Eurogroup recognised the need to continuously improve the EU’s crisis management framework. It welcomed the ECB Banking Supervision’s intention to maintain an extensive and comprehensive supervisory effort to reduce risks, in particular for banks under stricter supervisory monitoring. It also welcomed the ECB’s intention to focus on banks’ proactive preparedness for any impending deterioration in the quality of their assets as the result of the COVID-19 crisis.
The Eurogroup further expressed its support to the Commission’s ongoing work on a new action plan on Non-Performing Loans (NPLs) and, in view of the eventual expiry of the temporary State aid framework after the pandemic, it called on it to review its State aid framework for banks in the context of the review of the crisis management framework, both starting in 2021 and to be completed in parallel by 2023.
Click here to read the full text of the statement.