in may 2019 and even prior to that on a number of occasions, when the idea of introducing an automatic debt restructuring mechanism for the member states of the euro area had not yet been fully discarded. 12 the proposed changes in financial assistance to member states reassert principles of common sense that are already inscribed in the treaty. for the esm, as for any other lender, it would be nonsensical to grant credit to those whose debt is not deemed sustainable, given that this would constitute a non - refundable transfer. the safeguards in terms of ex ante conditionality and ex post monitoring that flank the financing mechanisms of the esm have always been, and still are, duly rigorous. they are safeguards that protect the resources that euro - area countries ‘ invested ’ at the time of the esm ’ s establishment and, as i recalled earlier, italy is the third largest contributor. the proposed reform is, of course, the result of a compromise – between the fears of those who have always rejected any further mutualization of risks and the opposing fears of an unjustified postponement of progress towards ‘ genuine economic and monetary union ’. the best way to convince everybody of the towards a genuine economic and monetary union ( 2012 ), report by herman van rompuy in close collaboration with mario draghi, jose manuel barroso and jean - claude juncker. i. visco, ‘ the economic and monetary union : time to break the deadlock ’, keynote address at the omfif - banca d ’ italia seminar ‘ future of the euro area ’, rome, 15 november 2019. see, for example, f. balassone and i. visco ( 2018 ), ‘ the economic and monetary union : time to break the deadlock ’, the european union review, vol. 23 – 1 - 2 - 3, march - november 2018, 9 - 22. usefulness of the reform is to see it as a starting point for the purposeful resumption of the path to european integration. a first step could be to announce the intention to incorporate the esm in european legislation in the medium term. what continues to be lacking is a comprehensive plan for the completion of monetary union, one that introduces a centralized fiscal capacity and a safe asset in the euro area, as well as the completion of banking union. the possibility of introducing a common fiscal capacity capable of flanking monetary policy in the task of stabilizing the euro area must

€704. 8 billion, of which €80. 5 has been paid in ; its lending capacity stands at €500 billion. in addition to having provided bilateral financial support and having participated in efsf programmes ( committing a total of almost €44 billion ), italy ’ s subscribed capital in the esm amounts to about €125 billion and its paid - in capital is more than €14 billion. each member ’ s share of the esm ’ s capital is based on the ecb ’ s capital keys, which reflect the country ’ s share in the total population and gross domestic product of the euro area. the portion of the esm ’ s capital that is subscribed but not paid in is ‘ callable ’ at any time if needed, meaning that esm members are asked to provide the corresponding funding with little advance notice. 2. esm governance and functions the esm was established by an intergovernmental agreement, outside the judicial framework of the european union. it is headed by the board of governors, which consists of the 19 ministers of finance in the euro area. unanimous approval is required for all important decisions ( including those relating to disbursements of financial assistance and the approval of memoranda of understanding with the countries that receive it ). the board of governors chooses whether it is chaired by the president of the eurogroup ( as is currently the case ) or by a president elected from within the board itself ; terms last two years and may be renewed. for the purposes of ensuring the efficacy of the esm ’ s decision - making system, the esm may operate with a qualified majority of 85 per cent of capital if, in the event of a threat to the economic and financial stability of the euro area, the european commission and the ecb ask it to make urgent decisions concerning financial assistance. the voting rights of board members correspond to the number of shares assigned to the respective countries. germany, france and italy have shares that exceed 15 per cent and, therefore, may also veto urgent decisions. the esm ’ s executive body is the board of directors, consisting of 19 members each of whom is appointed by a governor and has extensive experience in economics and finance. it is headed by the managing director who also serves as the esm ’ s legal representative. as i mentioned, the fundamental purpose of the esm is to provide financial assistance, subject to conditions, to member countries experiencing temporary difficulties in accessing the markets,