Proposal for a COUNCIL REGULATION amending Council Regulation (EU) No 407/2010 establishing a European financial stabilisation mechanism
Date: 2015-07-22
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: economic policy, economic recession, financial aid, financial policy, financial situation, non-participating country (euro area), participating country (euro area)

EUROPEAN 
COMMISSION 

Brussels, 22.7.2015  
COM(2015) 372 final 

2015/0162 (NLE) 

Proposal for a 

COUNCIL REGULATION 

amending Council Regulation (EU) No 407/2010 establishing a European financial 
stabilisation mechanism 

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EXPLANATORY MEMORANDUM 

The  high  level  of  monetary  and  economic  integration  of  euro  area  Member  States  and  the 
existence  of  specific  reinforced  measures  of  economic  coordination  among  them  based  on 
Article  136  of  the  Treaty  warrant  an  ad  hoc  treatment  when  providing  Union  financial 
assistance.  

While preserving fully the principle that all EU Member States should back the commitments 
of the EU budget, adequate arrangements should be put in place so as to guarantee that non 
euro  area  Member  States  are  fully  compensated  in  the  event  that  there  is  a  non-payment 
under the EFSM Facility which results in the use of resources within the EU Budget and/or 
the  Commission  making  a  demand  for  additional  resources  from  the  Non-Participating 
Member States. 

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2015/0162 (NLE) 

Proposal for a 

COUNCIL REGULATION 

amending Council Regulation (EU) No 407/2010 establishing a European financial 
stabilisation mechanism 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 122(2) thereof, 
Having regard to the proposal from the European Commission1, 

Whereas: 

(1) 

The  level  of  monetary  and  economic  integration  within  the  euro  area  has  increased 
over  the  last  years  and  any  financial  assistance  that  would  be  granted  to  a  Member 
State whose currency is the euro would be beneficial for the financial stability of the 
euro area as a whole. 

(2)  Moreover, since the establishment of the European Financial Stabilisation Mechanism 
(EFSM),  a  new  paragraph  3  was  added  to  Article  136  of  the  Treaty  (Decision 
2011/199/EU), clarifying under which conditions the Member States whose currency 
is  the  euro  may  establish  a  stability  mechanism  for  the  euro  area.  The  European 
Stability Mechanism (ESM) was set up by the Member States whose currency is the 
euro as the main stability mechanism for the euro area. 

(3) 

(4) 

(5) 

The  European  Financial  Stabilisation  Mechanism  can  provide  Union  financial 
assistance to all Member States, when the conditions set in Article 122(2) TFEU and 
in  Regulation  (EU)  No  407/2010  are  met.  The  risks  attached  to  a  situation  where  a 
Member  State  loses  market  access  differ  however  fundamentally,  depending  on 
whether that Member State is part of the euro area. The potential negative spill over 
effects  are  considerably  higher  for  the  euro  area,  where  having  a  Member  State  in 
financial difficulties is likely to create risks for the financial stability of the euro area 
as a whole. 

The  ESM  should  be  in  most  cases  the  financial  instrument  to  be  used  for  providing 
financial  assistance  to  a  euro  area  Member  State.  There  may  be  however  situations 
where practical, procedural or financial reasons call for a use of the EFSM, generally 
before or alongside an ESM financial assistance. Those situations warrant transposing 
the principle of reinforced solidarity between euro area Member States that is needed 
for  the  good  functioning  of  a  monetary  union  to  the  financial  assistance  mechanism 
operated under Union law. 

In these circumstances, the granting of new Union financial assistance to the benefit of 
a  Member  State  whose  currency  is  the  euro  should  be  made  conditional  upon  the 
establishment of arrangements which would ensure that the Member States which do 
not  participate  in  the  single  currency  would  be  fully  compensated  in  the  event  that 

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OJ C , , p. . 

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there is a non-payment under the EFSM Facility which results in the use of resources 
within  the  EU  Budget  and/or  the  Commission  making  a  demand  for  additional 
resources from the non-euro area Member States. 

(6) 

This principle was endorsed on 17 July 2015 by a joint statement of the Commission 
and the Council. 

(7) 

Regulation (EU) No 407/2010 should therefore be amended accordingly, 

HAS ADOPTED THIS REGULATION: 

Article 1 

The following paragraph 2a is inserted in Article 3 of Regulation (EU) No 407/2010: 

' 2a.  Where  the beneficiary Member  State  is a Member State whose currency is the euro, 
the granting of Union financial assistance shall be conditional upon legally binding provisions 
guaranteeing that the Member States which do not participate in the single currency are fully 
compensated  for  any  liability  they  may  incur  as  a  result  of  any  failure  by  the  beneficiary 
Member State to repay the financial assistance in accordance with its terms.' 

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  its  publication  in  the 
Official Journal of the European Union.  

Article 2 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the Council 
The President 

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