The discussions revolved primarily around the establishment of a Banking Recovery and Resolution Framework, and the role to be played by the European Stability Mechanism.

With regard to the European Stability Mechanism (ESM), Finance Minister Prof. Edward Scicluna sought assurances that the instruments provided in the mechanism pertaining to bank resolution and recapitalisation would be available without hesitation to small member states and its institutions. Luxembourg’s government supported Malta’s request.

“Countries, such as small Member States, which do not pose a systemic threat to the euro area as a whole, seem to be excluded by the legal wording,” Prof. Scicluna said. “This matter is a red line for Malta, and Malta is not ready to reach a compromise unless the issue is settled in Malta’s favour.”

Following the minister’s intervention, ESM Managing Director Klaus Regling gave a legal opinion which he sought and stated that the ESM is in a position to issue a written reply to the Maltese Government which would provide a guarantee that ESM funds would be available to all Eurozone member states irrespective of size or degree to how much a threat they pose to the Eurozone as a whole.

With regard to the Banking Recovery and Resolution Framework, which was one of the chief issues discussed during the ECOFIN meeting, Prof. Scicluna noted that this framework is essential as it would allow the rescue of ailing banks without imposing financial burdens on taxpayers, as has happened in the recent past.

“We want to protect all depositors as much as the taxpayers from a bail-in.  This is due to the presence of SMEs in the over 100,000 euro accounts. In the opinion of the Maltese Government, it is not only those depositors with deposits amounting to under €100,000 which should be protected, but all depositors across the board,” Finance Minister Prof. Edward Scicluna later also said.

“Thanks to a Resolution Fund, a Depositors Guarantee Fund, and finally the ESM itself, a country such as Malta would be provided with a financial back-stop which would not require a sovereign bail-out based on taxpayers’ contribution,” Prof. Scicluna said.

During the Council meeting, Prof. Scicluna also expounded Malta’s position that in time of crises, authorities need a degree of flexibility, which would allow them the freedom to exclude eligible deposits such as natural persons and SMEs from bail-in in instances where the financial stability of the country is threatened.

“In view of diverse country circumstances during a financial crises Malta is seeking the inclusion of a degree of flexibility even though this were to be “framed” within a number of acceptable conditions,” Finance Minister Prof. Edward Scicluna emphasised during a Council intervention.

Although a common consensus on the Directive was not reached during this session, Prof. Scicluna expressed satisfaction with the progress registered so far, and is hopeful that an acceptable compromise will be reached in the coming Wednesday’s session.

The Council meeting also adopted the Commission’s proposals on the Excessive Deficit Procedures (EDP) of a number of Member States, amongst which was Malta.

Minister Scicluna was accompanied by Malta’s Permanent Representative to the European Union, Ambassador Marlene Bonnici, and the Permanent Secretary in the Ministry for Finance, Mr. Alfred Camilleri.