Luxembourg-based European Stability Mechanism to be Reformed

On Monday 30 November and Tuesday 1 December 2020, Luxembourg's Finance Minister, Pierre Gramegna, participated in the Eurogroup and Ecofin meetings, which were held by videoconference: Minister Gramegna commented that historic agreement on ESM reform is proof that Europe is moving forward.

During the Eurogroup meeting, finance ministers managed to agree on a historic reform of the European Stability Mechanism (ESM). "The fact that an agreement has been reached on the signing of the revision treaty of the ESM, which is headquartered in Luxembourg, as well as the establishment of the safety net for the single resolution fund is very good news for Europe. This reform will strengthen the economic and financial stability of the euro area and its member states by giving ESM a greater role in crisis prevention. This historic agreement is proof that Europe is moving forward and is marking, two years ahead of schedule, an important step towards the completion of the Banking Union", underlined Minister Gramegna.

In euro zone format, the Eurogroup had a first discussion on the opinions of the European Commission relating to the draft budgetary plans for 2021 of the Member States published on 18 November 2020. The Eurogroup also welcomed the Director General of the Fund Monetary Affairs (IMF), Kristalina Georgieva, for an exchange of views on economic policies within the euro area. The IMF praised the efforts undertaken at national level by European governments as well as at European level. Like all the other institutions, such as the Organization for Economic Co-operation and Development (OECD), the European Central Bank or the European Commission, the IMF invites euro area countries to pursue an accommodating fiscal policy in 2021, to support the economy and citizens in the current health crisis.

During his speech, Minister Gramegna commented on the IMF's recommendations as follows: “I welcome the fact that the IMF and Europe share the same view on the need to support the recovery through ambitious economic policies. Despite the improved prospects thanks to the imminent availability of a vaccine, many uncertainties remain in the economic and health plan. Fiscal policies that are accommodating at the national level therefore remain essential. At the same time, Europe has shown unprecedented solidarity, as evidenced by the support measures decided at European level in recent months. These will complement national efforts and help ensure a sustainable recovery, meeting the twin challenges of digital and green transition."

During the Ecofin meeting on 1 December 2020, the finance ministers notably took stock of the agreement reached on CAR 7, the modification of the European directive on administrative cooperation in the tax field. The Luxembourg minister underlined: “I would like to congratulate the German presidency for the speed and for the remarkable work it has done on this file. Extending the applicable tax transparency rules to digital platforms is an important objective for the EU and its Member States and will strengthen our competitiveness. It also improves the functioning of tax administrative cooperation between member countries by introducing the possibility of carrying out joint audits within a clear framework that corresponds to modern governance."