46. European Stability Mechanism and Fiscal Compact. Европейский стабилизационный механизм и пакт о финансовой стабильности и росте.

In the light of the sustained sovereign tensions and the economic and financial difficulties experienced by euro area Member States, policy makers decided that a permanent resolution mechanism able to provide financial stability support would be needed to address instances when euro area Member States are either threatened with or facing difficulties with respect to their financial instability that would pose a threat to stability of the European Union as a whole.

The ESM is a permanent international financial institution that assists in preserving the financial stability of the European Union monetary union by providing temporary stability support to euro area Member States. The Treaty Establishing the European Stability Mechanism was signed on 2nd February 2012, establishing the ESM as an intergovernmental organization under public international law. The ESM will be the primary support mechanism to euro area Member States.

The ESM will issue bonds or other debt instruments on the financial markets to raise capital to provide assistance to Member States. The ESM will have total subscribed capital of €700 billion provided by euro area Member States. €80 billion of this will be in the form of paid-in capital with the remaining €620 billion as callable capital. This subscribed capital will provide a lending capacity for the ESM of €500 billion.

Financial assistance from the ESM will in all cases be activated upon a request from a Member State to the Chairperson of the ESM's Board of Governors and will be provided subject to conditionality appropriate to the instrument chosen. The initial instruments available to the ESM have been modeled upon those available to the EFSF:

• Provide loans to a euro area Member State in financial difficulties;

• Intervene in the debt primary and secondary markets;

• Act on the basis of a precautionary programme;

• Provide loans to governments for the purpose of recapitalization of financial institutions

Overall, the ESM provides substantial advantages for all participants, thanks to its more robust capital and enhanced governance structure. It will be able to react quickly and decisively to financially support Member States in difficulty.

The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (popularly known as the "fiscal compact") entered into force on 1 January 2013. The treaty aims to strengthen fiscal discipline in the euro area through the "balanced budget rule" and the automatic correction mechanism.

1. Limiting deficits - the balanced budget rule. The new treaty requires the national budgets of participating member states to be in balance or in surplus. This goal will be deemed to have been met if their annual structural government deficit does not exceed 0.5% of nominal GDP. Temporary deviation from this "balanced budget rule" is allowed only in exceptional economic circumstances. If government debt is significantly below the reference value of 60% of GDP, the limit for the deficit can be set at 1% of GDP.

2. Automatic correction mechanism. If a member state deviates from the balanced budget rule, an automatic correction mechanism will be triggered. The member state will have to correct the deviations over a defined period of time.

3. Transposing the rules into national legislation. The member states will have to incorporate the requirement for budgetary discipline and the automatic correction mechanism into their national legal systems, preferably at constitutional level. The deadline for doing so is one year at the latest after the entry into force of the treaty (i.e. by 1 January 2014).

4. European Court of Justice. Should a member state fail to transpose the "balanced budget rule" rule and the correction mechanism on time, the EU Court of Justice will have jurisdiction to take a decision on the matter. The Court's judgment will be binding, and, if not complied with, can be followed by a penalty of up to 0.1% of GDP. This amount will be payable to the European Stability Mechanism if the country's currency is the euro; otherwise, payment will be made to the general budget of the EU.

5. Budgetary and economic partnership programme. The programme will include a detailed description of the structural reforms which the member state will have to implement in order to ensure an effective and durable correction of its deficit.

6. Further coordination. The member states that are parties to the treaty will report their public debt issuance plans to the European Commission and to the Council. In addition, they will discuss and, if appropriate, coordinate among themselves and with the EU institutions in advance all the major economic reforms that they plan to undertake.