The European Stability Mechanism is the permanent crisis resolution mechanism for the countries of the euro area. The ESM issues debt instruments in order to finance loans and other forms of financial assistance to euro area Member States.
The European Stability Mechanism (ESM) is an important component of the comprehensive EU strategy designed to safeguard financial stability within the euro area. Like its predecessor – the temporary European Financial Stability Facility (EFSF) set up in 2010 – the ESM provides financial assistance to euro area Member States experiencing or threatened by financing difficulties.
To fulfill its purpose, the ESM raises funds by issuing money market instruments as well as medium and long-term debt with maturities of up to 30 years. ESM issuance is backed by a paid-in capital of €80 billion, in accordance with the contribution key annexed to the ESM Treaty.
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(Texts of the "Crisis Observatory" that had been presented at www.information-book.com in December 2014)
[use (-) to condense the timeline and mouse drag to move it]
Timeline | 15 December, 2013
Ireland exits the bailout package and returns to the markets. European Commission President Barroso congratulated the Irish government and the Irish people for the completion of the program and stated that "thanks to their efforts and sacrifices, Ireland will now be able to finance itself through its own efforts. The country was rescued with an 85bn euro package. The initial interest rates agreed with the official lenders were notably high (around 6%) - although these were soon adjusted to well below market rates (around 3%). The Irish bailout package lasted for three years (2010 - 2013).
This BBC article is cited | Publication Date: 2013-12-16
It is being called Ireland's exit from the bailout. If all goes to plan Ireland will receive no more financial assistance. It does not mean that the money has been repaid - that will take until 2042.
Ireland will still need to borrow - and all the signs are that it will be able to do so in the financial markets at an affordable cost.
This is an important stage in the Eurozone's financial repair effort. Ireland is the first country to be bailed out to get to this stage. Portugal is due to do it next year, though there are concerns that it might need more financial help.
From a New York Times article by Fintan O'Toole published on 2014-12-19
(which I found from this Greek article)
Since the banking crash of 2008, they have borne big tax increases, severe cuts in public services, mass unemployment and the large-scale emigration of their children. A 2012 study by the International Monetary Fund found that Ireland was in the “undesirable position” of owning “the costliest banking crisis in advanced economies since at least the Great Depression.” And it was “still ongoing,” imposing a huge public debt and dire fiscal costs on Irish citizens.(…)
The Irish story looked, after all, like a tale of patience rewarded. The bailout program, which gave the I.M.F. and European Union effective control over the Irish government’s fiscal policies, was left behind. Having stoically taken its medicine, the Irish economy seems to be in a fragile but real recovery. Gross domestic product is expected to rise by between 4 and 5 percent this year and by at least 3 percent in 2015. Unemployment has fallen from over 15 percent of the work force to 11 percent.
For the first time since 2008, the Irish government was able this autumn to bring in a largely neutral budget, without broad tax increases or spending cuts. Dublin’s streets are full of Christmas shoppers. Its property market is almost as buoyant, with rapidly rising house prices easing some of the pain of the vast mortgages inherited from the years of the CelticTiger bubble.
Timeline | 22 January, 2014
Spain becomes the second European country that exits its bailout program and returns to the international financial markets. The European Commissioner for Economic and Monetary Affairs and the Euro Olli Rehn said, "the programme has achieved its twin objectives of repairing and reforming the Spanish financial sector, and in so doing, helping to create a sound basis for the economic recovery". Whatsoever, he warned that Spain continues to face considerable "challenges" and that there should be no complacency. The Spanish authorities had already declared in November that they would not undertake a precautionary credit line from the European Stability Mechanism. The country was rescued with a 41.3 bn bailout package that lasted for two years (2012 - 2014).
Timeline | 05 May, 2014
Prime Minister of Portugal Pedro Passos Coelho announced that his country is planning a "clean exit" * from the bailout programme, according to its planned timeframe. As a result, when the memorandum ceases to apply, i.e. on the 17th of May, Portugal has decided not to request any follow-up programme.
* refers to the absence of a precautionary credit line accompanied by monitoring (This was also the approach followed by Ireland and Spain.)
Timeline | 02 June, 2014 | The supreme court of Portugal has rejected the government's plans to impose cuts to the welfare and public sector pay, worth between 2% and 12%, as unconstitutional.
Timeline | 03 June, 2014 | Portugal: the creditors of the country have suspended the country's final tranche of the bailout loan, worth € 2.6 bn., in response to the recent decision of the Portuguese Supreme Court to suspend the austerity measures promoted by the government of Pedro Coelho.