German Audit Office Sees Substantial Risks in Planned ESM Reform -ZDF
31 May 2021
Eurozone finance ministers agreed in November to widen the responsibilities of the fund, known as the European Stability Mechanism (ESM), to strengthen the resilience of the common currency area amid worries that the COVID-19 pandemic increased risks of future economic trouble.
The changes will allow the ESM to lend to the euro zone’s bank resolution fund to wind down failing banks if, in a banking crisis, the fund runs out of its own money.
That would result in “banking risks being criminalised at the public funds level,” ZDF quoted the report as saying, which means that the audit office is concerned that the state would have to pay in cases of banking crisis.
The German parliament’s budget committee will hear ESM chief Klaus Regling, Elke Koenig, who chairs the resolution fund and the Vice-President of Germany’s central bank Claudia Buch in a public hearing on Monday.
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