@EuroBriefing With the ESM reform, the goal of Germany is to replace the Troïka by a single institution. While the European Commission is seen as too soft and the ECB not being under control, the future ESM is expected to follow German views and to remain institutionally dominated by Germany.
@EuroBriefing For countries falling under an ESM assistance programme, and therefore being submitted to its “conditionality”, the choice will be between submission or departure from the Eurozone. Which is the choice Schäuble presented to Greece in 2015.
@EuroBriefing The political background which inspired the ESM reform is wrong. Germany believes that only aggravated market pressure can put Governments on track for fiscal responsibility. Hence for instance their quest for a change of the prudential treatment of Government bonds held by banks
@EuroBriefing Currently at a zero, Germany wants the risk-weighing of Government bonds holdings to be linked with credit ratings, so that the heightened risk of a bank bankruptcy in case of serious budgetary breaches by a Member State would accelerate its adoption of compliant behaviour. Folly
@EuroBriefing Another tool planned by Germany for ensuring fiscal compliance by States through aggravated market pressure is the inclusion of an automatic restructuring mechanism in the #ESM mandate, which would strongly incentivise bondholders to rush to divest before it is too late #StopMES
