When the Eurocent dropped: Europe`s responses to the debt crisis

INTRODUCTION
When the Eurocent dropped: Europe’s
responses to the debt crisis
Origin of the ‘responses’:
Financial crisis of 2008 and subsequent sovereign
debt crisis of 2010-…
Legal analysis of the ‘bail-outs’
Type of ‘responses’:
Strengthening of G&S Pact, reinforced economic
governance and financial assistance to
Member States
Centre Charles De Visscher pour le droit international et européen
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FINANCIAL ASSISTANCE MECHANISMS
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FINANCIAL ASSISTANCE MECHANISMS
Three mechanisms
Two angles
I.The Greek case
1.The legal structure of the mechanisms
II.The temporary set-up: EFSM and EFSF
- EFSM (European Financial Stabilisation Fund)
- EFSF (European Financial Stability Fund)
2.The legal issues
III.The future ESM (European Stability Mechanism)
Centre Charles De Visscher pour le droit international et européen
www.uclouvain.be/cedie
Centre Charles De Visscher pour le droit international et européen
www.uclouvain.be/cedie
I. THE GREEK CASE
I.
€110 Billion, with €80 from Eurozone MS
THE GREEK CASE
2. Legal issues
1.Legal structure
Intergovernmental agreements: Intercreditor
Agreement and Loan Facility Agreement
Outside framework of EU treaties, even though
managed by Commission and conditional on
Council Decision
Reference to: Council Decision and Memorandum
of Understanding
Not a problem in principle, but Articles 123, 124 &
125 TFEU
Centre Charles De Visscher pour le droit international et européen
www.uclouvain.be/cedie
Centre Charles De Visscher pour le droit international et européen
www.uclouvain.be/cedie
II. THE TEMPORARY SET-UP
II. THE TEMPORARY SET-UP
€500 Billion: €60 under EFSM and €440 under EFSF
2. Legal issues
1.Legal structure
EFSM:
Council
Regulation
establishing
European Financial Stabilisation Mechanism
a
EFSF:
intergovernmental
agreement:
EFSF
Framework Agreement with the EFSF, a Société
Anonyme
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EFSM: adopted on a EU legal basis: article 122 §2
TFEU, but « exceptional occurrences beyond the
Member State’s control »?
EFSF: outside framework of EU treaties: not a
problem in principle, but Article 125 TFEU ?
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III. THE FUTURE ESM
€500 Billion lending capacity
1.Legal structure
Treaty change: new 3rd paragraph to Article
136 TFEU
Creation of an intergovernmental organisation
based on a new treaty among Euro-area Member
States
Centre Charles De Visscher pour le droit international et européen
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III. THE FUTURE ESM
2. Legal issues
Treaty change on the basis of simplified revision
procedure of Article 48 §6 TEU
Enough to circumvent Article 125 TFEU ?
Centre Charles De Visscher pour le droit international et européen
www.uclouvain.be/cedie
III. THE FUTURE ESM
1.Legal structure
New 3rd paragraph to Article 136 TFEU:
“3. The Member States whose currency is the euro
may establish a stability mechanism to be activated if
indispensable to safeguard the stability of the euro
area as a whole. The granting of any required
financial assistance under the mechanism will be
made subject to strict conditionality”.
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CONCLUSION
Variety of mechanisms set up in the context of
the debt crisis
More interesting than the legality is the creativity
shown by governments
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www.uclouvain.be/cedie