ECB’s Nowotny: Turn ESM into European Monetary Fund for Greece’s Bailout

Veteran European Central Bank policymaker Ewald Nowotny has backed turning the European Stability Mechanism (ESM) into a IMF-styled lender and for it taking over from the ECB in Greece‘s bailout programme.

“The ESM might turn into a ‘European Monetary Fund‘, and I think that makes a lot of sense,” Nowotny, one of the longest-serving members of the ECB’s Governing Council, said on Friday.

This would show “a rich part of the world is able to solve imbalances by themselves,” while the set-up might also allow the ECB to end its formal role in eurozone bailout, something it has received public criticism for.

“We are having a discussion on this,” Nowotny said. “We don’t have specific knowledge of the pension system in Greece. If we have the ESM as a specialized institution and we concentrate all these kind of surveillance tasks in the ESM, I think it will be much better.”

The idea of a European Monetary Fund to finance troubled EU economies has been toyed around with recently by former German Finance Minister, Wolfgang Schaeuble, and current French president Emmanuel Macron.