German Chancellor Angela Merkel said she backed a proposal by Olaf Scholz, the country's finance minister, that the European Stability Mechanism be a common backstop for banks but only after national banks' balance sheets were trimmed first, Reuters reported May 16.

The chancellor reportedly told lawmakers that the global view on single-currency unions is that member states must be responsible for their actions. For this reason, the bailout fund should be further developed for it to have functions close to those of an international monetary fund, she added, according to Reuters.

European leaders said in 2017 that turning the ESM into a European version of the IMF would mean that markets will not doubt their capacity to respond quickly in the event of another financial crisis, as well as to force losses on private bondholders.