The European Stability Mechanism Is Not Ready for the Next Crisis

Summary:

As a rapid succession of crises engulfed the European economy, silence reigned on the Circuit de La Foire Internationale in Luxembourg, home to the European Stability Mechanism (ESM). The eurozone’s permanent rescue fund was set up in 2012 to provide loans to financially distressed countries, and in 2022 had about €410 billion in lending capacity. It played an important role during the euro crisis of 2009/10. But the ESM was left on the sidelines as the eurozone was hit by the pandemic and Vladimir Putin’s invasion of Ukraine, with member-states no longer being willing to resort to its bail-out programmes. In November 2022, EU leaders appointed Luxembourg finance minister Pierre Gramegna as the institution’s new managing director: he should press them to rethink the ESM’s status and purpose. New EU fiscal support instruments developed during the pandemic provide a blueprint for meaningful reform

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ESO Records

SWP Points of View: May 18th 2022: The ESM needs a new momentum https://www.europeansources.info/record/the-esm-needs-a-new-momentum/

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