(Updates with Schaeuble comment)
By Michelle Martin and Paul Carre
The European Stability Mechanism (ESM) — the euro zone’s bailout fund — should ultimately be turned into a European version of the International Monetary Fund, the head of euro zone finance ministers said on Monday in a German newspaper.
“I think it would make a lot of sense for the euro zone bailout fund ESM to be developed into a European IMF in the medium to long term,” Jeroen Dijsselbloem told the Frankfurter Allgemeine Zeitung (FAZ).
He said that would also mean that Greece’s current “troika” of lenders – the European Commission, European Central Bank and the IMF – would need to be broken up in the longer term.
“The ECB feels increasingly uncomfortable in its troika role, and rightly so I think,” Dijsselbloem said, adding that the European Commission had other “important tasks” that it should concentrate on.
He said the ESM should “build up the technical expertise that only the IMF has at the moment”.
German Finance Minister Wolfgang Schaeuble has also proposed turning the ESM into a European monetary fund to improve the management of crises in Europe.
“With the approval of an ESM programme, the participation of creditors in the restructuring of debt could in future be anchored in accordance with clear and predictable principles,” Schaeuble wrote in an opinion piece for the FAZ.
A transparent and predictable mechanism for restructuring public debt would help strengthen market discipline, reinforcing the “no bailout” principle in the EU treaty, Schaeuble said.
Schaeuble did not mention Greece in conjunction with the ESM and debt restructuring. Greece restructured privately-owned debt in 2012. Public creditors have lent Athens hundreds of billions of euros, but were spared in the 2012 restructuring.
Dijsselbloem said the institutions should maintain their roles in Greece’s current bailout and said he still expected the IMF to decide on a new programme, adding that it would be “most welcome” if this happened by the summer.
Germany, which holds elections in September, wants the IMF on board before new money is lent to Athens. But it disagrees with the IMF over debt relief and the fiscal targets that Greece should maintain after the bailout programme ends in 2018.
The IMF believes Greece’s debt load is unsustainable.
Dijsselbloem said he did not expect the current review of Greece’s bailout programme to be concluded quickly, adding that he did not think the institutions will complete it before a Eurogroup meeting in Malta in April.
Greece and its international creditors remain divided over the terms of a review, a senior euro zone official said on Thursday, a gap that will prevent Athens from getting fresh financial support.