European Monetary Fund (Regulation)

The European Stability Mechanism (ESM) will be transformed into the “European Monetary Fund” (EMF) and incorporated into EU law. In addition, the EU Commission wants to establish a financial backstop for the European Single Resolution Board (SRB) by way of the EMF.


cep is critical of the plans because the EU has no power to establish the EMF. The fact that Germany can be overruled on EMF decisions in the emergency procedure in the Council of Ministers is in breach of constitutional law under the Grundgesetz. The proposed Regulation also fails to include any proposals for a state insolvency procedure and even excludes the mandatory collective action clauses stipulated in the ESM Treaty for government bonds. In addition, the failure to impose obligatory conditions in the case of direct bank recapitalisations will reduce the pressure to reform.