The Eurogroup will look for a push to the reform of the euro between doubts for Italy

The ministers of Economy and Finance of the Eurozone (the Eurogroup) meet tomorrow in an extraordinary way to give a boost to the reform of the area of ​​the single currency, meeting on which will plan the uncertainty for the challenge of Italy to Brussels on account of your budget

The meeting will also include the ministers of the rest of the European Union countries, except for the United Kingdom, with the aim of closing the last fringes after months of negotiations and reaching the summit of December leaders with a battery of measures to improve the preparation for future crises.

No concrete decisions are expected from the meeting as the full package of measures will be presented to the Eurogroup on December 3, the last before the summit.

The economic headlines will discuss the finalization of the Banking Union, the reform of the European Stability Mechanism (ESM) - the rescue fund - and a possible budget for the euro area.

As for the Banking Union, they must close the details of the safety net of the Single Resolution Fund (FUR), in particular to decide if it can take effect before 2024 as it is now planned and the decision-making process to use it.

The FUR, financed by the banks, will have some 60,000 million euros to guarantee the recapitalization of the entities whose bankruptcy could cause damage to the entire eurozone, while its firewall should intervene as a last resort if the resolution is so expensive that the FUR It is insufficient.

In relation to the reform of the ESM, which seeks to increase its power in future rescues, countries will study how to coordinate the powers of economic oversight that they want to attribute to the European Commission.

They will also address the issue of the sustainability of the public debt of the States that request redemptions.

Specifically, the possibility of introducing "collective action clauses with simple aggregation clauses" (CACs, in financial jargon) into bond issues, which would make it easier for private investors to assume losses if debt restructuring is to be carried out.

In the Eurogroup there is "a lot of support" for these clauses, which support France and Germany, but "there are ten countries that ask for more and this is more controversial," explained European sources.

This is the "New Hanseatic League", led by the Netherlands with Finland, Sweden, Denmark, Estonia, Latvia, Lithuania, Ireland, Czech Republic and Slovakia, which demand even more power for the ESM to set "strict" conditions in the rescues and advocates restructuring the debt before granting it if necessary.

On the other hand, and although it is not a priority for December, the Eurogroup will debate on possible instruments to stabilize the economy in specific crises, in particular, the French idea of ​​a budget for the eurozone, which is far from being supported by all.

France and Germany will present tomorrow a new proposal of budget that will detail the one that they made in June in the declaration of Meseberg, according to French sources.

At the same time, although it is not on the agenda, it is expected that the situation in Italy will creep "undoubtedly in talks at the margins," according to European sources.

The Commission will publish its opinion on the Italian budget draft for 2019 next Wednesday and could also request that a sanction procedure be opened in Rome (which requires countries' approval), after Italy has not substantially changed the plan that Brussels rejected for breaking European standards.

The Eurogroup will formally discuss the issue on December 3.

The Italian situation could weigh on the reform of the eurozone, feeding the distrust of the States that demand more sanitation of national finances to deepen integration.


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