Published on 5th September 2023

The Daily Express picked up on my article pubished through IREF about the European Stability Mechanism:

The ESM’s firepower – to back the debts of Eurozone member states and thereby to act as the backstop for the currency itself – depends upon its having backers of sufficient size and with high enough credit ratings.

The credit rating threshold as AA, the same as the European Financial Stability Facility, the ESM’s elder brother.

France was threatened with a downgrade by Standard & Poor’s to AA- in June, but avoided it because of the ‘implicit support’ of Germany (so why bother with a separate credit rating?).

Had the downgrade gone through, the ESM’s firepower would have reduced to the point where it would be unable to support a large Eurozone member state, meaning it may as well not exist.

And why is Germany still rated AAA actually, when it does not control its own currency, when its economy is stagnating, and when it is responsible explictly for its own debts, and implictly for those of France, Italy, Spain and so on, and for those of the European institutions well?