The New Financial Stability Mechanisms and Their (Poor) Consistency with EU Law

Abstract

This working paper examines the institutional reaction to the sovereign debt crisis in Europe. The response has so far consisted of three new financial mechanisms: the European Financial Stabilisation Mechanism, the European Financial Stability Facility, and the European Stability Mechanism. These have each a different legal basis and a specific regime. They display a varying degree of compatibility with EU law. The institutional quick fix employed by Eurozone countries was essentially a resort to private law and traditional international law techniques. This constitutes a setback from the evolution of the EU, at the expense mainly of the European Parliament and the Court of Justice.