Published online by Cambridge University Press: 05 June 2012
In the first half of 2010, rescue mechanisms were drafted in order to help peripheral euro-area Member States with considerable problems in their public finances. The assistance took various forms. As the crisis first manifested itself in Greece, Member States engaged in a scheme of bilateral agreements (for €80 billion) between the euro-area Member States and Greece, with the exception of Slovakia, supplemented by the IMF (International Monetary Fund) (€30 billion) under strict conditionality supervised by the Commission, the European Central Bank (ECB) and the IMF. The successive reports of the ‘troika’ had to allow for the piecemeal allocation of €110 billion. The last tranche, of 8 billions euros, was allocated in November 2011.
Because of serious problems in other countries (Portugal, Spain, Italy and, later on, Ireland) and the risk of this spreading to additional countries, a more ambitious scheme was adopted under Article 122(2) TFEU (formerly, Article 100(2) TEC) in May–June 2010. This included a European Financial Stability Mechanism (EFSM), managed by the Commission and whose assistance could be sought by all EU Member States (€60 billion in total). The Commission would borrow on the markets and lend to the country with problems (guaranteed by the EU budget). In addition, there was a European Financial Stability Facility (EFSF) to which the states in difficulty would have access. The Facility, a special purpose mechanism under Luxembourg law, would borrow on the markets under the guarantee of the euro-area Member States (and, when possible, other willing EU Member States) in order to lend to the country in need an amount up to €440 billion (which, for technical reasons, and in particular the objective of an AAA quotation for the loans of the Facility, provides it with a borrowing capacity of €250 billion) to which must be added €250 billion in credits from the IMF.