GFS LinkedIn
GFS Facebook
GFS Twitter
GFS RSS feed

EU agrees permanent crisis mechanism

Monday 1 November 2010 - by Nicola York

European Council, Brussels

European members' heads of state have agreed to establish a permanent crisis mechanism to safeguard the financial stability of the euro by 2013.

Following last week's European Council meeting, EC President Herman van Rompuy will start consultations with members on a limited change to the Lisbon Treaty and the general features of a future new mechanism, in partnership with the Commission.

The consultation will look at the role of the private sector, the role of the IMF and the strong conditionality under which such programmes should operate.

The crisis mechanism is to come into force in 2013 when it will replace the existing temporary emergency fund.

It is to help EU states, like Greece, that get into financial difficulties to weather the crisis without other EU states having to jump in. There will be no change to the clause in the current treaty that bans member states and the Union from bailing out other member states.


The European Council will make the final decision, both on the outline of a crisis mechanism and on a limited treaty amendment review, at its December meeting.

Any changes to the treaty will be ratified at the latest by mid-2013.

In addition, van Rompuy will examine whether euro area members should have the right to participate in decision-making in economic and monetary union-related procedures if there is a permanent threat to the stability of the euro area as a whole.

Germany welcomed the agreement saying Chancellor Angela Merkel is "delighted" by the fact that private financial institutions and the IMF are to be involved in the creation of the new crisis mechanism.

The German Federal Government says: "The only point that Germany did not manage to have accepted was its proposal to suspend the voting rights of states that fail to keep to the deficit limits laid out in the Stability and Growth Pact."

Joseph Daul, chairman of the EPP Group in the European Parliament says:


 "By agreeing on the need to establish a permanent crisis mechanism to guarantee financial stability in the eurozone, the European Council has shown a spirit of responsibility and has worked on the long-term outlook."


WHAT DO YOU THINK?
 
Name:
   
Email:
   
Comment:
   
Post as Anonymous
  Display name
   
Please, enter security code
   
 

No comments yet.

STRAW POLL

Will markets in 2012 have a tougher time than 2011?

Yes

No

Don't know

View results

FIND A REGION world regions