It was established on 27 September 2012 as a permanent firewall for the eurozone, to safeguard and provide instant access to financial assistance programmes for member states of the eurozone in financial difficulty, with a maximum lending capacity of €500 billion. It did nothing to stop high levels of spending and the accumulation of debt in eurozone countries. They needed a solution—and. However, refinancing through the ESM has helped several countries mitigate the costs of financing their debt; Greece, for example, saved between and €10 billion per year between 2012 and 2016 while working with the institution and its predecessor. As Ashoka Mody notes in his book , “…Europeans set about creating an “incomplete monetary union,” one that had a common monetary policy but lacked the fiscal safeguards to dampen booms and recessions.” (Mody 3-4) In other words, should a state using the euro find itself in economic distress, no organization within the European Union would be able to offer the state financial assistance.Instead of creating a common pool of funds, European leaders attempted to mandate fiscal moderation through the Maastricht Treaty and subsequent agreements. This should be done without duplicating the Commission’s role and in full respect of the treaties.”European leaders have sought to reform the ESM within the past few years, and on December 4, 2019, the eurogroup of eurozone finance ministers held a in which they discussed the future of the ESM.
(L 91) 1. The Treaty Establishing the European Stability Mechanism was signed by the member states of the eurozone to found the European Stability Mechanism (ESM), an international organisation located in Luxembourg, to act as a permanent source of financial assistance for member states in financial difficulty, with a maximum lending capacity of €500 billion. The European (In)stability Mechanism Italian politicians are right to block the new ESM treaty. In 2018, the issued after a summit between German Chancellor Angela Merkel and French President Emmanuel Macron expressed support for strengthening the European Stability Mechanism in the future:The ESM should have an enhanced role in designing and monitoring programmes in close cooperation with the Commission and in liaison with the ECB and based on a compromise to be found between the Commission and the ESM. Pandemic Crisis Support
The euro is the currency used by 19 of the European Union’s member states, just as the U.S. dollar is the currency used in the United States of America.