Wolfgang Schauble left a poisoned fruit on the Eurogroup table before leaving, a document in which he proposed to turn the current European Stability Mechanism (ESM) fund into a (totally free of politics) super-controller of national budgets. And much more.
Upon a state’s request for aid (such as those from Greece, Portugal and Ireland), it would automatically trigger the bankruptcy of that state. It would be a mechanism similar to that of the banking sector, which would decrease the ESM’s exposure (part of the burden would be borne by the investors). But it’s a sword of Damocles over the heads of countries on the edge, forcing them to reduce their debt according to a fiscal compact or be damned.
For Italy, this is a nightmare scenario. It is true that our debt, thanks to the slight recovery and cuts in public spending, has somewhat “stabilized” in relation to GDP, but its consistency, in absolute values, continues to be worrisome. Especially so in light of the end of quantitative easing (because of the risk of speculative attacks and a steep increase of interest rates).