The European Stability Mechanism and the IMF: From the Enhanced Cooperation to Embedded Supervisor

2018 ◽  
Author(s):  
Cameron Climie
Keyword(s):  
European Monetary Union ◽  
Crisis Response ◽  
Institutional Arrangements ◽  
Structural Reforms ◽  
European Monetary ◽  
European Stability Mechanism ◽  
Response Preferences ◽  
The International Monetary Fund ◽  
Close Fit ◽  
Integration Analysis

This paper examines the role played by the International Monetary Fund (IMF) in the European Stability Mechanism (ESM), finding that the ESM has greatly expanded the IMF’s surveillance and oversight roles in the European Monetary Union (EMU). Building from a liberal intergovernmental framework of integration analysis, this paper argues that the IMF’s function as a de facto EMU supervisor in the ESM, a significant break from prior European integration, stems from the alignment of crisis response preferences amongst the EMU’s largest economies, the erosion of the credibility of the European Commission as an enforcer of structural reforms, and the IMF’s close fit with the preferred institutional arrangements that derived from the bargaining dynamics between euro members.   Full text available at: https://doi.org/10.22215/rera.v12i1.1232  

scholarly journals The European Stability Mechanism and the IMF: From the Enhanced Cooperation to Embedded Supervisor

2018 ◽  
Vol 12 (1) ◽  
Author(s):  
Cameron Climie
Keyword(s):  
European Monetary Union ◽  
Crisis Response ◽  
Institutional Arrangements ◽  
Structural Reforms ◽  
European Monetary ◽  
European Stability Mechanism ◽  
Response Preferences ◽  
The International Monetary Fund ◽  
Close Fit ◽  
Integration Analysis

This paper examines the role played by the International Monetary Fund (IMF) in the European Stability Mechanism (ESM), finding that the ESM has greatly expanded the IMF’s surveillance and oversight roles in the European Monetary Union (EMU). Building from a liberal intergovernmental framework of integration analysis, this paper argues that the IMF’s function as a de facto EMU supervisor in the ESM, a significant break from prior European integration, stems from the alignment of crisis response preferences amongst the EMU’s largest economies, the erosion of the credibility of the European Commission as an enforcer of structural reforms, and the IMF’s close fit with the preferred institutional arrangements that derived from the bargaining dynamics between euro members.

New Facilities and Institutions

2017 ◽  
Author(s):  
C. Randall Henning
Keyword(s):  
Member State ◽  
Euro Area ◽  
Institutional Arrangements ◽  
European Monetary ◽  
Research Institutes ◽  
European Stability Mechanism ◽  
The International Monetary Fund ◽  
European Monetary Fund ◽  
New Facilities ◽  
Political Matter

As the crisis evolved, euro-area governments first constructed two transitional financial facilities and then created a permanent fund. This chapter reviews the creation of the financial facilities of the euro area culminating in the establishment of the European Stability Mechanism. The ESM treaty contains a strong presumption, but not a strict legal requirement, that the International Monetary Fund (IMF) will also be involved in assistance to a member state. As a political matter, the Fund’s involvement is strongly favored in creditor countries of the euro area. The emergence of the ESM, a new institutional player in crisis finance, prompted a reconsideration of the institutional arrangements under which crisis programs are designed. The chapter reviews proposals from research institutes and the European Parliament to combine resources of the European Commission and the ESM into a European Monetary Fund.

In Defense of the Euro: Austrian School Approach (Critics of ECB Errors and Brussel’s Interventionism)

2012 ◽  
pp. 78-100
Author(s):  
J. Huerta De Soto
Keyword(s):  
Monetary Union ◽  
European Monetary Union ◽  
Gold Standard ◽  
Social Problems ◽  
National Currency ◽  
Austrian School ◽  
Structural Reforms ◽  
European Monetary ◽  
Political Interests ◽  
Monetary Authorities

The mechanism of euro functioning is analyzed in the article from the standpoint of limiting the autonomy of monetary authorities of the European monetary union members, which precludes them from manipulating national currency for the short sighted political interests and postponing painful structural reforms under crises aimed at liberalizing the economy. In some aspects euro excels the classical gold standard, which fell under monetary nationalism attack in the 1930s. Motives and arguments of critics and adversaries are analyzed and the reasons for euro defense are exposed. Real economic and social problems of Europe and ECB errors are described.

An Evolutionary Path Towards a European Monetary Fund

2018 ◽  
Vol 15 (1) ◽  
Author(s):  
Daniel Gros
Keyword(s):  
Financial Stability ◽  
Policy Coordination ◽  
Banking Union ◽  
European Monetary ◽  
European Stability Mechanism ◽  
Market Instability ◽  
Rescue Mechanism ◽  
The International Monetary Fund ◽  
European Monetary Fund ◽  
The Imf

Abstract There is no need for Europe to replicate the International Monetary Fund (IMF). The European Stability Mechanism (ESM) can provide the backstop for sovereigns, even without a financial contribution from the IMF. In this sense, the ESM already constitutes to a large extent a ‘European Monetary Fund’. Other IMF activities, such as surveillance and policy coordination should remain with the European Commission, the Eurogroup and other existing bodies. The financial resources of the ESM will be required as a backstop only intermittently, in times of great financial market instability. The need for this will evolve as a function of the nature of financial markets and their cross-border integration. It is not possible to forecast with any precision when the next financial crisis might break out and what form it will take. Any evolution of the ESM should thus aim at enhancing flexibility in its instruments while clarifying its overall mandate (financial stability), rather than changing the details of the rescue mechanism or its institutional structure. The financial stability function of the ESM should be extended to the central institutions of the Banking Union, with an ultimate backstop for the Single Resolution Fund (SRF). Moreover, the ESM should be viewed as the natural instrument for unifying the euro area’s representation in the IMF.

scholarly journals Potential Hidden Losses for Slovakia as a Member of the European Monetary Union

2013 ◽  
Vol 13 (1) ◽  
pp. 24-51
Author(s):  
Jozef Stískala
Keyword(s):  
Financial Markets ◽  
Monetary Union ◽  
European Monetary Union ◽  
Slovak Republic ◽  
Balance Sheet ◽  
European Monetary ◽  
European Crisis ◽  
European System ◽  
The Common ◽  
European Stability Mechanism

Abstract Aim of this paper is to evaluate solutions for European crisis in context of Slovak participation in rescue mechanisms. The most evident element is the European stability mechanism. There is no problem with estimation of the potential losses caused by the eurozone break-up for the Slovak Republic regarding ESM. But there are other mechanisms used mainly by the ECB as monetary instruments for stabilization of the financial markets. ECB via these instruments bears potential risk of losses regarding default of the member state(s) that could damage its balance sheet. The Protocol on the statute of the European system of central banks and ECB says that losses from the common mechanisms should be borne by eurozone member states according to their share in the ECB´s capital. It is inevitable for the Slovak Republic to realize the size of its exposure via European programmes on the peripheral economies to maintain appropriate attitude as far as the eurozone issues are concerned. The author therefore tries to reveal potential hidden losses for Slovakia as a member of the European monetary union that are not explicitly seen.

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