Estonian PM: Single currency to be strengthened by euro area reforms

TALLINN - Estonian Prime Minister Juri Ratas said that reforming the European Stability Mechanism (ESM) is a necessary measure, and Estonia will support it at the Euro Summit of the European Council to be held in Brussels next Friday.

"We have discussed the ESM reform in the government and the Riigikogu on several occasions, with the latest of them being the sitting of June 6. We support finding a balanced solution for the decision-making process of ESM loans. That means that decisions regarding granting loans to the common resolution fund can be made with sufficient speed in exceptional cases, but the competences stemming from member states' constitutions are also taken into account. Options for both swift decision-making as well as including the Riigikogu in the process and in formulating Estonia's position must be guaranteed, if needed," Ratas said.

Ratas added that the ESM reform is necessary for Estonia and also protects the taxpayer. 

"Estonia has supported the strengthening of various defense mechanisms of the euro area, so that the EU member states would not need to use the taxpayer's money for solving any possible problems in the financial sector. The ESM reform is another pillar in rendering the euro area more resilient and also helps solve banks' problems from a common resolution fund into which they themselves have made payments. Only in cases when the instruments of the resolution fund are no longer sufficient, a loan from the ESM can be considered. The reform will break the vicious circle of states and banks that caused a domino effect in the financial crisis that started in 2008 and resulted in states ending up in financial difficulties due to their attempts to save banks. For that reason, Estonia will support the amendment to the ESM agreement next week," the prime minister said.

Altogether 27 leaders of EU member states will meet at the Euro Summit in Brussels on June 21 to discuss the Economic and Monetary Union, the ESM reform and the budgetary instrument of the euro area.