Category: Geography

All You Need to Know About ESM

All You Need to Know About ESM

ESM: European stability mechanism

European Stability Mechanism, abbreviated as ESM by abbreviationfinder, is a set of instruments intended to guarantee the stability of the European Economic and Monetary Union as a whole.

The first version of the “Treaty establishing the European Stability Mechanism” was signed by the 17 member states of the Eurozone on July 11, 2011 and a modified version on February 2, 2012. The ESM replaced the euro rescue package that was set up for a limited period in May 2010. – In 2018 it belonged to 19 EU member states.

Temporary rescue package: The euro rescue package was set up in May 2010 with the aim of averting the impending insolvency of Greece and thus cushioning the effects of a failure of this member state (pan-European bank rescue operations after full suspension of payments) on the euro zone. The rescue parachute as it was on 9/10 5. was adopted in 2010, comprises a guarantee volume of € 750 billion and is composed as follows:

  • The European Financial Stabilization Mechanism (abbreviation EFSM), established as a community instrument of the EU, provides € 60 billion from the EU budget. It is no longer applicable when the ESM comes into force at the latest.
  • The European Financial Stability Facility (abbreviation EFSF), set up as an intergovernmental instrument, contributes € 440 billion to the guaranteed volume of the rescue package. The EFSF founded as a special purpose vehicle (seat: Luxembourg) can grant the country concerned loans at significantly lower interest rates than the indebted country would have to pay on the free capital market. The EFSF refinances these loans on the capital market, for which all member states of the euro zone must be liable in accordance with their capital stake in the ECB. A prerequisite for the granting of loans is that the state concerned accepts a financial and economic recovery program aimed at restoring financial stability.
  • The IMF provides up to € 250 billion.

At summit meetings in March and July 2011, the heads of state and government of the euro zone decided to modify the EFSF: The guarantee framework of the euro countries was increased so that they can obtain the total amount of € 440 billion as cheaply as possible (AAA rating) on ​​the capital market € 780 billion increased. After this expansion, Germany will have to provide guarantees in the amount of € 211 billion. In addition, the competencies for the EFSF (and its successor, the ESM) have been expanded: Under certain conditions there is the possibility to intervene in the primary market for government bonds and to buy up old government debt on the secondary markets. Furthermore, a member state can, as it were, receive loans »preventively«, ie before the (imminent) occurrence of insolvency. Both instruments presuppose the existence or Adoption of austerity and reform programs in the affected states. Finally, states can obtain loans to recapitalize their financial institutions. This also applies to countries that are stable, but whose banks are threatened by the high debt of another country in the euro zone.

The Bundestag approved these extensions on September 29, 2011 after a controversial debate. 523 MPs voted for the bill, 85 voted no and 3 abstained. Constitutional complaints, including The Federal Constitutional Court had already dismissed the question of the extent to which the euro rescue package contradicts national or European law in its judgment of September 7, 2011. At the same time, however, the court obliged the federal government to obtain the approval of the Bundestag’s budget committee before every step in future rescue measures.

Another summit in October 2011 decided, among other things, to use a so-called credit lever to optimize the EFSF’s resources so that it is expected to have 1 trillion euros at its disposal.

Permanent protection and emergency aid mechanism: As the debt crisis in the euro zone continued, the European Council decided in December 2010 to set up a permanent institutional protection and emergency aid mechanism and to expand Article 136 TFEU as follows: »The member states whose currency is the euro can set up a stability mechanism, which is activated when it is absolutely necessary to preserve the stability of the euro area as a whole. The granting of all necessary financial assistance within the framework of the mechanism will be subject to strict conditions. «This treaty change does not affect the no-bail-out clause (non-bailout clause), but it does allow support if the stability of the euro area as a whole is jeopardized. All members of the Eurozone belong to the ESM (Articles 1 and 2 of the Treaty establishing the European Stability Mechanism), and its seat is in Luxembourg (Article 31, Paragraph 1). Voting members of the Board of Governors, which also has to decide on the granting of loans, are the members of the national governments of the member states responsible for finances (Article 5, paragraph 1). The member of the European Commission responsible for economic and monetary affairs, the President of the ECB and the President of the Eurogroup, provided that he is not a voting member of the Board of Governors, may also attend its meetings (Article 5, Paragraph 3). Decisions on financial aid from the ESM do not necessarily require unanimity; under certain circumstances, according to Article 4, it is sufficient Paragraph 4, a qualified majority of 85% of the votes cast (since the voting rights are based on the contribution to the share capital, Germany, France and Italy, which each hold more than 15% of the ESM shares, retain a right of veto). With regard to the capital structure, the ESM draws from three sources:

  • € 80 billion are direct deposits made by the member states of the euro area.
  • The member states guarantee a total financial volume of € 620 billion, of which a maximum of € 420 billion will be disbursed as loans. The difference in the guaranteed amount is aimed at ensuring that ESM bonds receive a very good creditworthiness (AAA rating) on ​​the capital markets and that a lower interest rate is paid for them.
  • The IMF continues to participate with a loan amount of € 250 billion.

The instruments available to the ESM are similar to those of the EFSF (in addition to lending, precautionary credit lines, recapitalization of financial institutions and primary and secondary market interventions).

A member state can only receive support from the ESM if it is indispensable for the stability of the euro area as a whole. Generally it is granted in the form of loans. The board of directors must unanimously decide to grant the loan; it must be preceded by a debt sustainability analysis. The support is linked to strict requirements for the restructuring of public finances.

In principle, the member states of the euro zone are also involved in the financing of the ESM in accordance with their capital share in the ECB. According to the contribution key, the German share is 27.1464%; in terms of ESM capital to be paid in, this amounts to € 21.72 billion; Germany must provide guarantees of € 168.3 billion in terms of callable capital.

Fiscal pact and further stabilization measures: At an EU summit in December 2011, the heads of state and government of the EU member states, with the exception of Great Britain, agreed to embark on the path to a fiscal policy union (Stability and Growth Pact). With the “Treaty on Stability, Coordination and Governance in Economic and Monetary Union” (“Fiscal Treaty” for short, also “Fiscal Compact”), which all EU member states with the exception of Great Britain and the Czech Republic signed on March 2, 2012, In essence, the contracting states undertake to implement debt brakes (the structurally conditioned, cyclical new debt must not exceed 0.5% of GDP) in national law with strong binding force (preferably at constitutional level) and accept automatic sanctions if the new rules on budget discipline are not observed (the automatism can only be stopped by an express majority vote of the contracting states). The Fiscal Compact came into force on January 1, 2013.

ESM European Stability Mechanism

All You Need to Know About EEC

All You Need to Know About EEC

European Economic Community, abbreviated as EEC by abbreviationfinder, English European Economic Community [j ʊ ərə pi ː ən i ː kə n ɔ m ɪ k kə mju ː n ɪ t ɪ ], abbreviation EEC [i ː i ː si ː ], French Communauté Économique Européenne [k ɔ myno te ek ɔ n ɔmik ør ɔ pe εn], abbreviation CEE [seə e], by the Treaty of Rome (EEC Treaty, the Treaty of Rome), signed on 25. 3. 1957 between Belgium, the Federal Republic of Germany, France, Italy, Luxembourg and the Netherlands established a supranational community for the purpose of economic integration. The EEC Treaty came into force on January 1, 1958 and is valid for an unlimited period. With the Treaty establishing the European Union, whichcame into force on November 1, 1993, the EEC became the European Community (EC) renamed to document that their goals go beyond mere economic integration. With the entry into force of the Lisbon Treaty on December 1, 2009, the EC was transferred to the EU.

The establishment of the common market (European internal market) can be seen as the first stage of integration; The second stage is an economic policy carried out according to uniform criteria, which is intended to accompany the third stage of integration, the monetary union (European Economic and Monetary Union, abbreviation EMU) with a common currency and monetary policy. From July 1, 1967 to November 30, 2009, the EEC / EC was part of the European Communities (EG). It was also their most important sub-organization, as it was not limited to certain economic areas. By joining Denmark, Great Britain and Ireland on January 1, 1973, Greece on January 1, 1981, Spain and Portugal on January 1, 1986, Finland, Austria and Sweden on January 1, 1995 as well as Estonia, Latvia and Lithuania, Malta, Poland, the Slovak Republic, Slovenia, the Czech Republic, Hungary and Cyprus on May 1, 2004, and Bulgaria and Romania on January 1, 2007, the EC had grown considerably in economic and political importance.

European banking union

Banking union, banking union, English European Banking Union [j ʊ ərə pi ː ən bæ ŋ k ɪ ŋ ju ː njən],Term that describes various measures to not only support the European banking sector in the short term, but also to restore its stability in the long term. The aim is to fundamentally strengthen the European Economic and Monetary Union. Following on from the Commission’s proposals, a general distinction is made between three pillars of the European Banking Union: 1. common banking supervision, 2. common rules for the resolution of banks, and 3. common deposit insurance, which is intended to replace the national guarantee systems.

Member states of the banking union are all countries of the euro zone; the member states of the EU that do not belong to the euro zone can join voluntarily.

European banking union

Banking union, banking union, English European Banking Union [j ʊ ərə pi ː ən bæ ŋ k ɪ ŋ ju ː njən], designated term, the various measures to the European banking sector to support not only short term but long term, its stability restore. The aim is tofundamentally strengthenthe European Economic and Monetary Union. Building on the Commission’s proposals, a general distinction is made between three pillars of the European Banking Union:

  1. a common banking regulator;
  2. common rules for the resolution of banks;
  3. a common deposit insurance.

Member states of the banking union are all countries of the euro zone; the member states of the EU that do not belong to the euro zone can join voluntarily.

Common Banking Supervision: In 2013, the negotiators of the European Parliament, the Council and the Commission agreed on a legal basis for a common banking supervision, the Unified banking supervision mechanism (English Single Supervisory Mechanism, abbreviation SSM). Then one takes over at the European Central Bank (ECB) in the participating countries controls every bank with total assets of more than € 30 billion or more than 20% of the economic strength of its home country (»systemically important banks«). Regardless of these conditions, the ECB directly controls at least the three most important banks in each participating country. After the differences between the ECB and the European Parliament on accountability had been resolved, Parliament passed the Banking Supervision Act on September 12, 2013. On October 15, 2013, the EU finance ministers finally approved this legal basis. A supervisory body to which each participating country sends a representative is responsible for the tasks of banking supervision. If the Governing Council does not accept the Supervisory Board’s proposals, it is up to a mediation committee to resolve these disputes. This is to ensure that the final decision does not lie with the Governing Council and that monetary policy responsibility and supervision are clearly separated. The banking supervisory authority began its work on November 4, 2014. In preparation for this, a comprehensive assessment took place, the results of which the ECB published on October 26, 2014 (Stress test).

EEC European Economic Community

All You Need to Know About European Union

All You Need to Know About European Union

Environmental policy has a shorter history in the EU than cooperation on business and industry. But despite a late start, it has been a success. Every decision on tightening leads to improvements in so many countries that the overall effect is great.

Through the Amsterdam Treaty of 1999, the principle of sustainable development became a fundamental goal of the EU. This means that in all decisions made at EU level, environmental considerations must be taken into account and any environmental impact examined.

Two principles in the environmental field must be guiding. One is the precautionary principle, which states that if a product is not proven harmless, it should not be approved. The other is called “the polluter pays” and means that the company, industry or industry that causes environmental damage must bear the costs.

Short for European Union by abbreviationfinder, the EU sets multi-annual environmental programs. The current program runs until 2020 and has three main objectives: protecting and conserving the EU’s natural resources, making the EU a resource-efficient, green and competitive ‘low-carbon economy’, and protecting EU citizens from environmental and health hazards. One of the larger projects is to make the economy “circular”, which means to take in environmental effects already when designing a product or service, in the form of environmentally friendly materials, packaging requirements, final recycling, etc.

The EU’s success in environmental policy includes the regulation of chemicals, which forced a review of all chemicals on the market. The most dangerous ones were banned immediately, in any case there is a less dangerous alternative, the more dangerous versions are banned and all other chemicals must be registered so that the use can be documented.

The department’s mixed success includes the protection of biodiversity. About 20% of the EU’s area has been set aside as natural areas where flora and fauna are to be protected. Despite this, work is too slow to save many plant and animal species from extinction.

The failures of environmental policy must include the fact that emissions from the transport sector have not been able to be reduced despite EU legislation, but on the contrary have increased since 1990. This applies to both road transport and aviation.

The EU has also regulated water and air quality, adopted a strategy for waste management and is working against disturbing noise.

The climate

In 2006, the EU adopted the world’s toughest package of measures to reduce climate change. In 2016, the EU had already exceeded the first of its four climate targets for 2020 – to reduce carbon dioxide emissions by 20 percent compared to 1990 (the reduction was then 23 percent). The target has now been raised to a 40 percent reduction by 2030.

The second goal also seems to be realized; that 20% of the energy consumed in the EU should be generated from renewable energy sources. The EU used 17 percent renewable energy in 2017. The new goal will be to reach 27 percent by 2030.
The third goal – to get the vehicle fleet to run on 10 percent renewable fuels – is possibly within reach thanks to the popularity of electric cars (7.1 percent in 2016).
The fourth goal is also considered to be entirely possible; to reduce energy consumption by 20 percent compared to 2005. In 2016, EU countries had saved more energy than the set target (2 percent over), but a couple of cold winters lowered that result somewhat.

The target for 2030 will be 30 percent.

Within the UN circle, the EU has had mixed success in getting the rest of the world to agree on a global climate agreement. The agreement in Paris in 2015 won many supporters, including the largest emitting countries, the United States and China, but in 2018, US President Donald Trump decided that the United States will not implement its commitment.

However, researchers believe that the Paris Agreement has given too little and come too late to meet the UN’s ambition to keep global warming below 2 degrees. Despite this, the UN Climate Panel said in the autumn of 2018 that the world can still save the situation, but then many, new measures must be taken and it must happen quickly.

Energy

Energy is a hot political issue in several ways. It is about securing access to energy in a world where resources are declining and demand is increasing. It is also about the climate because oil, coal and natural gas are responsible for the largest emissions of greenhouse gases. Finally, security policy is affected because EU countries have to import 54 percent of their energy, mainly from Russia and the Middle East.

The EU has long sought to create a common energy market. Gradual deregulation in the mid-2000’s, for example, forced dominant energy companies to open up their networks to competitors and gave customers the right to buy energy from non-domestic producers.
It was not enough to create a cohesive market. In Denmark, for example, people are still forced to close their wind turbines during particularly windy days. The surplus electricity should be able to be sold to northern Germany, where coal-fired power plants are operating at full capacity, but there is a lack of lines between the countries.

The EU has therefore directed regional aid and special energy allocations to infrastructure projects that connect the countries’ energy connections. New lines now link, for example, Sweden, the Baltics, Poland and Germany, while others connect Spain and France.

With the Treaty of Lisbon, energy policy became more of a common concern for EU countries. With the support of this, EU leaders gathered in 2015 for a decision on a European Energy Union. More energy networks are being expanded across borders, new technology enables smarter energy use and competition between energy companies has intensified through clearer pricing. In addition, the member states have committed themselves to help a country in solidarity in the event of an acute energy crisis.

However, energy remains a shared competence between the EU and the member states. The states retain control over important parts of energy policy such as energy taxes, the right to decide which energy sources they want (nuclear power is rejected in some countries and appreciated in others) as well as the right to conclude their own energy agreements with third countries.

The European Commission has tried to have the last word on energy agreements with third countries, in order to be able to slow down agreements that increase the EU’s dependence on imports. But EU countries have only agreed to inform Brussels in advance.

All You Need to Know About European Union