Thread by @lucasguttenberg

1/ Some thoughts on the @EU_Commission proposal for a European Monetary Fund. General take:
- Proposal well-intended but will have at best little impact and could potentially endanger SRF backstop
- EMF is misnomer: proposal does not create EU equivalent to IMF
Let me explain:

@EU_Commission 2/ Regulation would transfer ESM basically as is into EU law, except adding a backstop for the SRF. DE veto intact, process to grant financial assistance with COM lead role same, ESM staff role is codified. EP gets reporting rights. Unanimity in Council and EP consent required.

@EU_Commission 3/ Two main implications:
- Practical impact very limited, only label at ESM doorbell changes and ESM staff becomes EU staff. Integration into EU law of course makes sense in principle for coherence and accountability reasons. But absolutely no urgency.

@EU_Commission 4/
- But proposal creates unnecessary political link between backstop and Unionisation of ESM. That's dangerous: Same govts are against EU law integration that are undermining backstop. Opens second front rather than room for compromise on backstop. Complicates things massively.

@EU_Commission 5/ COM will now spend political capital on a nice-to-have but not essential proposal that changes very little, while strongly complicating negotiations on the backstop - a real essential. That's a very high price to pay for the COM to shore up its position in #EMU surveillance.

@EU_Commission 6/ And one addendum: Proposal does go ahead with kicking out the IMF. That opens a whole different debate about the future role of the Fund, its funding and how it would work if euro area countries were to apply for Fund support in parallel.