EU Finance Ministers approve reforms for the Eurozone

The ministers of Economy and Finance of the Eurozone managed this Tuesday (04.12.2018) to close an agreement to reinforce the area of ​​the single currency in the face of future crises, which includes giving more power to its rescue fund and improving the response to bank failures . German Finance Minister Olaf Scholz wrote on Twitter: “After almost 16 hours of negotiations in the Eurogroup we have a result, a good one, the reform of the euro is taking decisive steps”. The agreement came after more than eighteen hours of meeting, although the States have been negotiating the reforms since June. “It has been a tough negotiation but I think the result is a breakthrough on some key issues,” said the group’s president, Mário Centeno, at a press conference. However, the countries are only open to discuss a version of the budget of the eurozone with limited functions, and the European Deposit Guarantee System, which does not generate consensus even to initiate the political discussions to implement it. The package of measures has two pillars: a reform to give more power to the European Stability Mechanism (ESM), the European rescue fund in order to improve crisis prevention, and an agreement to launch the Single Fund firewall of Resolution. The ministers approved to give more prerogatives to the ESM in the economic surveillance of the countries, supporting the agreement that has arrived with the European Commission to cooperate in this task, which until now corresponded exclusively to the Community Executive They also agreed to “improve the effectiveness” of the precautionary credit lines of the ESM that can be requested by States that are experiencing difficulties due to external factors and do not need a full bailout. The second fundamental point is the pact on the firewall of the Single Fund for Bank Resolution, which must act as a last resort to pay for the European interventions of banks in bankruptcy and avoid the public rescue. The agreement must receive the approval of the European leaders at the summit next week in Brussels.