Edited by Federico Fabbrini and Marco Ventoruzzo
Chapter 4: Mechanisms of financial stabilisation
Chapter 4 zooms into the mechanisms of financial assistance that were established in response to the euro-crisis and the threat of sovereign default in a number of Eurozone member states. While the author considers both the European Financial Stability Mechanism - a temporary support tool established through a Council regulation - and the European Financial Stability Facility - a private vehicle incorporated under Luxembourg Law - he mostly focuses on the ESM - an international institution set-up by the Eurozone member states through an intergovernmental treaty in 2012. The author, in particular, explains the main administrative features of the ESM and discusses in detail the Pringle judgment of the ECJ, which confirmed its compatibility with the EU legal framework. As this chapter explains, the establishment of the ESM modifies the original understanding of the ‘no-bailout’ provision enshrined in the EU treaties but reflects the growing awareness for financial stability as a common concern in the Eurozone. Nevertheless, the author identifies challenges in the ESM and cautions against the pressure to re-incorporate it within the EU legal framework without major amendments.
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