European Finance Ministers Agreed On Reforms Of The Eurozone Rescue Fund

European Finance Ministers Agreed On Reforms Of The Eurozone Rescue Fund

European finance ministers agreed on Monday reforms on major reforms of the eurozone rescue fund. These were postponed for a year due to Italy's reluctance to support the changes and crisis caused by the new coronavirus pandemic. The fund, known as the European Stability Mechanism (ESM), will become a creditor of the last resort of the Euroregion from 2022. Its financial "firepower" will also be strengthened, as will its power to supervise monetary bloc states in difficulty. The ESM was established in 2012 during the euro area debt crisis to prevent the bankruptcy of members of the monetary bloc, including Greece. "There are decisions, especially at European Union (EU) level, that sound so technical that it is initially difficult to see their political impact," said German Finance Minister Olaf Scholz, who said the ESM agreement was one such decision. "The reform of the ESM strengthens the euro and the entire European banking sector," he added. Although the eurozone agreed to the reforms last year, the approval of the agreement was first halted by Italy's objections and subsequently by the pandemic of the new coronavirus. The ESM will provide rescue loans to troubled states. However, the condition for drawing loans will be the consolidation of public finances and reforms to improve their competitiveness. The fund divided politicians in Italy, with far-right parties calling it an instrument of control by Brussels, which also led to rifts in the governing coalition.