Tagged: bail-out

To bail out or not to bail out: the CJEU confirms competence to conclude the ESM Treaty

The Pringle case (Case C-370/12 Pringle) decided today is arguably the case of the year. In an accelerated procedure, the full court (all 27 judges!) answered a number of questions referred by the Irish Supreme Court on the competence of EU Member States under EU law to conclude the ESM Treaty. The ESM Treaty is a treaty under public international law concluded by the members of the eurozone to create a permanent crisis mechanism to safeguard the stability of the euro area. It is the latest answer to the ongoing sovereign debt crisis (dubbed the ‘eurocrisis’) experienced by a number EU Member States that have the euro as a currency.

Despite the good intentions of its creators, the idea of setting up a permanent international body competent to grant financial assistance (amongst other things) to eurozone members in financial difficulties goes somewhat against the foundations of the Economic and Monetary Union, which aims at ensuring price stability through sound government budgets. It is thus not surprising that a case was brought before the CJEU so that the latter had to rule on whether Member States can actually do this under EU law.

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