Pierre Gramegna, executive manager of the European Stability Mechanism (ESM), was on a mission in China in early December to attract investments. Meanwhile the ESM, officially a sovereign debt backstop, was exposed as a bank-bailout operation by Italian Treasury Minister Giancarlo Giorgetti.
“We had very fruitful meetings with the Ministry of Finance, the People’s Bank of China, and Chinese investors in our ESM bonds. We also had a meeting with Asian Infrastructure Investment Bank (AIIB) President Jin Liqun,” Gramegna told Xinhua Dec. 5.
While on one side calling for upholding and improving trade between the EU and China, thus implicitly going against so-called “decoupling” or “de-risking,” Gramegna de facto promoted involvement of China in rescuing European megabanks.
The ESM was established by a treaty among euro area member states in 2012, and is now undergoing a reform to upgrade it, from a sovereign debt operation, into a bank-bailout fund as well. The new treaty has been ratified by all EU members except Italy.
Italian Treasury Minister Giancarlo Giorgetti was unusually candid when he explained why Italy is dragging its feet, speaking before a joint session of Chamber and Senate budget committees Dec. 4. “It will be Parliament that will say whether the agreement negotiated by the Italian government at the time is to be approved or not,” said Giorgetti, adding that the reform of the EU’s bailout mechanism submitted to parliament for approval is “not for states, if anything it is for the banks.”
