More details on the #eurogroup agreement on ESM reform have been published on Saturday June 15 with: 1) a draft of the revised treaty (consilium.europa.eu/media/39772/re…) and 2) the annex detailing the eligibility criteria to the precautionary credit lines (consilium.europa.eu/media/39771/es…) 1/n
Comparing the annex to the criteria agreed in December (consilium.europa.eu/media/37267/es…) it appears that not much was changed, the 5 quantitative and qualitative ex-ante criteria are the same, while previous criteria that were not mentioned in December came back 2/n
i.e. track record of access to capital markets, sustainable external position & absence of systemic financial sector vulnerabilities. This means that the criteria that were already tight have become tighter, making the PCCL & in fine OMT less accessible in a liquidity crisis 3/n
None of the flaws that I had identified in December (bruegel.org/2018/12/does-t…) have been corrected: 1) structural deficit still used in one of the criteria, 2) criteria so tight that 10 out of 19 EZ countries could not access it today if they needed to. 4/n
That's a terrible outcome in my view. Only hope is that (according to letter from eurogroup president consilium.europa.eu/media/39769/eu…) there is still some work to do before it is finalized in December 2019 , so next 6 months will be last chance to amend ESM Treaty to make PCCL useful 5/5
