2017, 16 pp (PDF)

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The debate about the future of the European Stability Mechanism (ESM) has taken a centre stage in the discussion about the future of economic and monetary union (EMU). This is partly due to the possible departure of the IMF from European programmes and to the idea to make the ESM a permanent backstop for banking union. But this is also because changing the ESM treaty is seen by many as a quick-fix alternative to a proper overhaul of EMU architecture that would include EU Treaty change.
Here, the cart is put often before the horse: Discussions on the precise vehicle of a reform (in this case the ESM) take priority over properly assessing the need of a tool itself. The question how to reform the ESM is not the most fundamental one facing EMU today; but ESM reform can nevertheless contribute to making EMU more stable.
This paper argues that the discussion on ESM reform in fact subsumes four separate policy debates. These debates are only loosely linked functionally, but are often being connected politically. The paper gives an overview and assessment of the most important proposals in each of these four debates.