BRUSSELS, Dec. 4 (Xinhua) -- Eurogroup has agreed to strengthen its permanent firewall against financial crisis, said its President Mario Centeno here on Tuesday.
"We have agreed to enhance the role of the European Stability Mechanism (ESM) to further strengthen the crisis prevention and resolution capabilities of the euro area," Centeno said early Tuesday after a regular Eurogroup meeting overnight.
Established in 2012 amid severe debt crisis, ESM aims to play a role of "permanent firewall" to provide financial assistance to euro area countries experiencing or threatened by severe financing problems, as well as to provide loans for recapitalisation of troubled banks.
In the future, ESM will further play a role as backstop to the Single Resolution Fund (SRF) for failing banks, according to the consensus reached among euro area finance ministers, which Centeno sees as an important step to further strengthen the credibility of the Banking Union.
"The backstop will be introduced earlier than the originally foreseen date of 2024, provided that sufficient progress with risk reduction is achieved by 2020," said the president, while reaffirming that ESM support is a last resort, for which an appropriate level of conditionality should be ensured.
Commenting on the reform of ESM, Klaus Regling, chief of ESM Management Board, noted that the backstop is obviously really needed to give the SRF the necessary firepower for big problems.
He also underlined the importance of making the precautionary instruments in the ESM toolkit, which have never been used so far, more accessible.
