European financial assistance mechanisms are capable of supporting EU Member States in difficulty and thereby preserving the financial stability of the EU and the euro area. Financial assistance is linked to macroeconomic conditionality.
In May 2010, the European Union and euro area Member States set up a stabilisation mechanism that consists of
to safeguard EU financial stability amid severe tensions in euro-area sovereign debt markets.
In addition, in October 2012
Its main features build on the EFSF. The ESM will be the primary support mechanism to euro area Member States and complements the new framework for reinforced economic surveillance in the EU. This new framework, which includes in particular a stronger focus on debt sustainability and more effective enforcement measures, focuses on prevention and will substantially reduce the probability of a crisis emerging in the future.
Alongside the EFSM, EFSF and ESM,
are available forming a viable safety-net, providing financial stability support.
Further, for Member States that have not yet adopted the euro, the
Under BoP, the EU can provide mutual assistance to non-euro area Member States when a Member State is in difficulties or is seriously threatened with difficulties as regards its balance of payments. BoP assistance is designed to ease a country's external financing constraints. This can take the form of medium-term financial assistance.
Although the framework of medium-term financial assistance allows providing loans solely by the EU, in recent practice the assistance has usually been extended in co-operation with IMF and other international institutions or countries.
The European Commission works with the European Central Bank and the International Monetary Fund as a ‘Troika’ to advise and oversee economic adjustment programmes in countries that have received financial assistance from the EU or EU Member States. The aim of these programmes is to help those countries in need of financial assistance to address their economic weaknesses through reforms that will enable them to return to sustainable economic growth.
In March 2014, the European Parliament passed a resolution raising a number of concerns and questions about the role and operations of the Troika in euro area programme countries.
The Commission welcomes the resolution and now publishes its response to the concerns. The Commission’s reply to the Parliament’s questionnaire as part of its inquiry before the resolution is also published below.
The financial support is accompanied by fiscal and economic measures. For this purpose, the EU and its Member States have taken a series of important decisions that will strengthen economic and budgetary coordination in the EU as a whole and in the euro area in particular. As a result, the EU’s interdependent economies will be better placed to chart a path to growth and job creation.
>> see: EU economic governance