Inter-institutional cooperation

Overview

The ESM cooperates with a wide range of institutions at global, regional, and national level. Cooperation with counterparts is paramount for delivering on the ESM’s mandate, especially when extending financial assistance to members. Additionally, other elements of ESM’s activities also benefit from collaborative actions. Interinstitutional cooperation supports the development of the ESM’s analytical capabilities and policies. The ESM also consults with peers on best practices and shares knowledge and expertise with others. In addition, the ESM regularly interacts with external stakeholders to keep itself abreast of economic analyses and developments and contribute to the European policy debate.

Partner institutions include:

The European Commission

Since its creation, the ESM has maintained a close relationship with the European Commission. This cooperation has intensified over time, thanks to the common work carried out to provide financial assistance programmes for five euro area members (Ireland, Portugal, Greece, Spain and Cyprus).

In April 2018, an MoU was signed between the European Commission and the ESM that codified the existing working methods. Under the amended ESM Treaty, the ESM will perform an enhanced role in the design, negotiation, and monitoring of financial assistance programmes and interaction with the Commission will become even closer. The modalities of collaboration will be laid out in a Memorandum of Cooperation to be approved after the entry into force of the amended ESM Treaty.

In addition, the ESM participates in regular post-programme surveillance missions carried out by the Commission. This allows the ESM to fulfil the requirements of its Early Warning System, i.e. to assess a former programme country’s capacity to repay its outstanding loans.

The European Central Bank (ECB)

The ESM also established close ties with the European Central Bank in the context of the financial assistance programmes. The ECB is entrusted to perform specific tasks in liaison with the European Commission under the ESM Treaty. This has led to developing regular interaction at all levels. ECB and ESM staff also collaborate on issues of common interest such as financial stability in the euro area and deepening Economic and Monetary Union.

The Single Resolution Board (SRB)

The ESM has closely cooperated with the Single Resolution Board especially since the 2018 Eurogroup agreement on the creation of a backstop facility by the ESM for the Single Resolution Fund. An example of a successful inter-institutional project was the joint work on the methodology for assessing the repayment capacity of the SRB. Such cooperation is expected to continue with a view to ensuring full preparedness for the activation of the backstop, once the process of ratifying the amended ESM Treaty is completed.

The International Monetary Fund (IMF)

Close cooperation with the IMF is set down in the ESM Treaty, and both institutions contributed via loans to the financial assistance programmes for Ireland, Portugal, Greece and Cyprus. Apart from collaboration on programme design and reviews, both institutions also cooperate regularly during non-crisis times on a range of policy matters. This interaction comes on top of other engagements with the IMF such as at the margins of the IMF Annual and Spring meetings.

The European Investment Bank (EIB)

The EIB played an instrumental role in setting up the EFSF (the ESM’s predecessor) in 2010, by providing technical and organisational assistance. The close ties between the ESM and EIB have continued to develop, leveraging on each other’s complementary expertise. In recent years, the ESM and EIB have jointly organised an annual seminar on capital markets. This event gives central bankers and international private investors a platform to meet with experts from the ESM, EIB and the Commission - European institutions that are major bond issuers.

Regional financing arrangements (RFAs)

RFAs are mechanisms or agreements through which groups of countries mutually pledge financial support to countries experiencing financial difficulties in their regions. The ESM, jointly with RFAs from other parts of the world, created a policy dialogue to strengthen the Global Financial Safety Net. In this context, the heads of RFAs and representatives of the IMF meet once a year to exchange views on topics related to crisis prevention and resolution.  In addition, RFAs hold an annual research seminar, where academics and experts discuss research and policy work on issues of common interest.