Cap. 523 Art. 12of the COP-16 in agreed objective satisfaction the regard to a THE Having regard thereof, Having regard Functioning of Belgian [Having regard [Having regard [After 1 Opinion of … 2 Opinion of … 3 Opinion of … the Functioning the competences upon its their respective 2010, the to establish a the euro

The European Council welcomed the successful outcome Cancun as an important step forward in global efforts to reach the of staying below 2°C increase in global temperatures, and noted with successful implementation of the strategy it agreed in March. stability mechanism for Member States whose currency is the euro

EUROPEAN COUNCIL, to the Treaty on European Union, and in particular Article 48(6)

to the proposal for revising Article 136 of the Treaty on the the European Union submitted to the European Council by the Government on 16 December 2010, 1 to the opinion of the European Parliament, ] 2 to the opinion of the European Commission, ] obtaining the opinion of the European Central Bank,3]

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(not yet published in the Official Journal). (not yet published in the Official Journal).

(not yet published in the Official Journal). amending all or part of the provisions of Part Three of the Treaty on of the European Union (TFEU). Such a decision may not increase conferred on the Union in the Treaties and its entry into force is conditional subsequent approval by the Member States in accordance with constitutional requirements.

(2) At the meeting of the European Council of 28 and 29 October Heads of State or Government agreed on the need for Member States permanent crisis mechanism to safeguard the financial stability of whole and invited the President of the European Council to undertake with the members of the European Council on a limited treaty change that effect.

(3) On 16 December 2010, the Belgian Government submitted, with Article 48(6), first subparagraph, of the TEU, a proposal for 136 of the TFEU by adding a paragraph under which the Member currency is the euro may establish a stability mechanism to indispensable to safeguard the stability of the euro area as a whole the granting of any required financial assistance under the mechanism subject to strict conditionality. At the same time, the European conclusions about the future stability mechanism (paragraphs 1 to 4).

(4) The stability mechanism will provide the necessary tool such cases of risk to the financial stability of the euro area as a whole experienced in 2010, and hence help preserve the economic and financial the Union itself. At its meeting of 16 December 2010, the European that, as this mechanism is designed to safeguard the financial stability area as whole, Article 122(2) of the TFEU will no longer be purposes. The Heads of State or Government therefore agreed that used for such purposes.

(5) On 16 December 2010, the European Council decided accordance with Article 48(6), second subparagraph, of the TEU, Parliament and the Commission, on the proposal. It also decided European Central Bank. [On […dates…], the European Parliament, and the European Central Bank, respectively, adopted opinions on the

(6) The amendment concerns a provision contained in Part Three and it does not increase the competences conferred on the Union in HAS ADOPTED THIS DECISION:

Article 1 The following paragraph shall be added to Article 136 of the Functioning of the European Union: "3. The Member States whose currency is the euro may establish mechanism to be activated if indispensable to safeguard the euro area as a whole. The granting of any required assistance under the mechanism will be made conditionality." shall enter into force on 1 January 2013, provided that all the referred to in the first paragraph have been received, or, failing that, on the month following receipt of the last of the notifications referred to paragraph. Article 3

shall be published in the Official Journal of the European Union.

For the European Council The President "The recent events have demonstrated that financial distress in one can rapidly threaten macro-financial stability of the EU as a whole contagion channels. This is particularly true for the euro area where and the financial sectors in particular, are closely intertwined.

Throughout the current crisis, euro area Member States have demonstrated determination to take decisive and coordinated action to safeguard in the euro area as a whole, if needed and return growth to a sustainable In particular, the European Financial Stability Facility (EFSF) has provide for swift and effective liquidity assistance, together with Financial Stabilisation Mechanism (EFSM) and the International and on the basis of stringent programmes of economic and fiscal policy to be implemented by the affected Member State and ensuring debt On 28 - 29 October the European Council agreed on the need to set crisis mechanism to safeguard the financial stability of the euro Eurogroup Ministers agreed that this European Stability Mechanism based on the European Financial Stability Facility capable of providing assistance packages to euro area Member States under strict functioning according to the rules of the current EFSF. The ESM will complement the new framework of reinfo governance, aiming at an effective and rigorous economic surveillance, focus on prevention and will substantially reduce the probability of the future. Rules will be adapted to provide for a case by case participation creditors, fully consistent with IMF policies. In all cases, in taxpayers' money, and to send a clear signal to private creditors that subordinated to those of the official sector, an ESM loan will creditor status, junior only to the IMF loan. Assistance provided to a euro area Member State will be based programme of economic and fiscal adjustment and on a rigorous debt analysis conducted by the European Commission and the IMF, in ECB.

On this basis, the Eurogroup Ministers will take a unanimous providing assistance.

For countries considered solvent, on the basis of the debt sustainability conducted by the Commission and the IMF, in liaison with the sector creditors would be encouraged to maintain their exposure international rules and fully in line with the IMF practices. In the unexpected event that a country would appear to be insolvent State has to negotiate a comprehensive restructuring plan with creditors, in line with IMF practices with a view to restoring debt debt sustainability can be reached through these measures, the ESM liquidity assistance. In order to facilitate this process, standardized and identical clauses (CACs) will be included, in such a way as to preserve market terms and conditions of all new euro area government bonds starting terms of payment (standstill, extension of the maturity, interest-rate cut in the event that the debtor is unable to pay.

will strive to lengthen the maturities of their new bond emissions mediumterm to avoid refinancing peaks.

effectiveness of this framework will be evaluated in 2016 by the liaison with the ECB.

that any private sector involvement based on these terms and not be effective before mid-2013.

the European Council Herman Van Rompuy has indicated that his limited treaty change to the European Council at its next meeting will decision." have made it clear, as set out below, that they stand ready to do whatever to ensure the stability of the euro area as a whole. The euro is and central part of European integration. In particular, the Heads called action in the following areas:

a) Fully implementing existing programmes: we impressive progress made in implementing the Greek the agreed adjustment programme for Ireland, including the 2011 budget. b) Keeping up fiscal responsibility: we are all committed implementing the budgetary policy recommendations, the fiscal targets for 2010 and 2011, and to correcting within the agreed deadlines. c) Stepping up growth-enhancing structural reforms: determined to accelerate structural reforms to enhance d) Strengthening the Stability and Growth Pact and new macrosurveillance framework from summer 2011. e) Ensuring the availability of adequate financial support EFSF pending the entry into force of the permanent note that only a very limited amount has been committed to support the Irish programme. f) Further strengthening of the financial system both regulatory and supervisory frameworks and conducting in the banking sector. g) Expressing full support for ECB action: we support independent responsibility to ensure price stability, inflation expectations and thereby contribute to financial euro area. We are committed to ensuring the financial the central banks of the Eurosystem. Elements of this strategy will be further developed in the coming comprehensive response to any challenges, as part of our new economic months, Europe has gone through a serious financial crisis. Although recovery in Europe is now on track, risks remain and we must continue our action. We adopted today a comprehensive package of measures which to turn the corner of the financial crisis and continue our path sustainable growth. This package will strengthen the economic governance Union and ensure the lasting stability of the euro area as a whole. robust action at the EU level to stimulate growth by strengthening Market, reducing the overall burden of regulation and promoting trade countries. We discussed the grave situation in Libya, expressing our the adoption of UNSCR 1973 and underlining our determination to implementation. Regarding the Southern Neighbourhood, we determination to develop a new partnership with the region and called implementation of the orientations set on 11 March 2011; we agreed on steps to support the countries of the Southern Neighbourhood in the Finally, we discussed the lessons to be drawn from the events that Japan, notably as regards nuclear safety. ECONOMIC POLICY

European Council today adopted a comprehensive package of measures crisis, preserve financial stability and lay the ground for smart, socially inclusive and job-creating growth. This will strengthen the governance and competitiveness of the euro area and of the European the European Semester: Europe 2020, fiscal consolidation and reform the new framework of the European semester, the European Council priorities for fiscal consolidation and structural reform.* It underscored priority to restoring sound budgets and fiscal sustainability, unemployment through labour market reforms and making new efforts to All Member States will translate these priorities into concrete included in their Stability or Convergence Programmes and National Programmes. On this basis, the Commission will present its proposals for opinions and recommendations in good time for their adoption European Council. particular, Member States will present multi-annual consolidation plans specific deficit, revenue and expenditure targets, the strategy envisaged to targets and a timeline for its implementation. Fiscal policies for 2012 restore confidence by bringing debt trends back onto a sustainable that deficits are brought back below 3% of GDP in the timeframe the Council. This requires in most cases an annual structural above 0.5% of GDP. Consolidation should be frontloaded in facing very large structural deficits or very high or rapidly increasing debt. consolidation efforts must be complemented by growth-enhancing reforms. To that end, Member States emphasise their commitment to the

Council’s conclusions of 15 February and 7 March 2011 and further to the Annual Growth Survey. See also the Presidency’s synthesis report of 16 March 2011. - combat poverty and promote social inclusion; - invest in education and training; - balance security and flexibility; - reform pension systems; - attract private capital to finance growth; - boost research and innovation; - and allow cost-effective access to energy and step up policies.