Amendment to ESM ‘of relative interest’ say govt sources

The amendment to the treaty of the European stability Mechanism (ESM) is a matter of “relative interest” to Italy given the solidity of its banking system, government sources said on Thursday.

The government, which had referred the issue to parliament, takes note of the decision by the House to reject ratification of the reform treaty of the European bailout mechanism, the sources said.

The reform, they added, “is an integration of relative interest and topicality for Italy, given that its main element envisages the extension of safeguards to systemic banks in difficulty, in a context in which the Italian banking system is among the most solid in Europe and the West”.

“In any case, the ESM is in full operation in its original configuration, i.e. to support member states in financial difficulty.

“The decision by the Italian Parliament not to proceed with ratification (of the reform treaty) may be the occasion to start a reflection at the European level on possible new changes to the treaty, which might be more useful to the entire Eurozone,” the sources said.

Italy has been under pressure from Europe to ratify the reform of the ESM amid concerns over budget sovereignty and claims that the mechanism should also be used to support growth.

Meloni also said she first wanted to await the outcome of negotiations on the European Stability and Growth Pact, the new rules on public finance under which member states should be operating from next year.

EU finance ministers reached a political agreement on the Pact at an extraordinary ECOFIN meeting on Wednesday.

Italy is the only EU member state not to have ratified the new ESM.