With Greece in a dire economic situation and the risk of contagion, the 17 eurozone member states sign in Brussels a first version of the Treaty establishing the European Stability Mechanism. This Treaty was not activated but was amended and created the foundation for another Treaty on the establishment of the European Stability Mechanism, which was signed again in Brussels on March 2, 2012.
The European Stability Mechanism (ESM) is part of the EU’s strategy for financial stability in the eurozone. It provides financial assistance to eurozone countries that are experiencing or threatened by financing difficulties.
The eurozone countries signed an intergovernmental treaty establishing the ESM on February 2, 2012. The ESM was inaugurated at the end of 2012 and is an intergovernmental organization governed by public international law, based in Luxembourg. Its shareholders are the eurozone countries. The ESM issues debt securities to finance loans and other forms of financial assistance to eurozone countries.
The ESM took over from its predecessor, the European Financial Stability Facility, which had been established in 2010.
In 2020, the ESM created the Pandemic Crisis Support Instrument, which was based on a precautionary credit line of financial assistance and was available to eurozone countries to support domestic financing of healthcare-related expenses, treatment, and prevention due to the COVID-19 crisis.
