Finance ministers of the European Union agreed in a common financial stabilisation mechanism

An agreement about the creation of a European financial stabilisation mechanism was attained at the extraordinary meeting of EU finance ministers held in Brussels last night.
13. 05. 2010
 

The mechanism creates the option to offer fast and strong assistance of members of the euro area in extraordinary circumstances where borrowing from the markets has become difficult for countries.

The finance ministers admitted that recent events on the markets have pinpointed the need to create a common security network for the euro area. The summary of the meeting notes that the circumstances are clearly extraordinary and out of the control of individual Member States. According to the decisions made last night, the stabilisation mechanism will remain in place for as long as necessary.

“The leaders of the EU managed to come together and send an important message to the markets at this difficult moment. However, the long-term solution lies in every country's homework with their budget deficits and reforms. Fortunately, we can expect to see some results here,” admitted Minister of Finance Jürgen Ligi.

The mechanism consists of two parts totalling up to 500 billion euros. Up to 440 billion euros of this is comprised by an instrument from which countries in the euro area can borrow. Countries outside the euro area can apply for loans of up to 60 billion euros.

Both Spain and Portugal announced at the meeting of the EU finance ministers that additional measures have been taken to reduce their budget deficits even more than before.