In order to counter the potential systemic implications of the government debt situation in a number of euro area countries in a decisive and timely manner, the Heads of State or Government in the EU have agreed on the establishment of a permanent European Stability Mechanism (ESM) to safeguard fiscal stability in the whole euro.
This mechanism will supersede the European Financial Stability Facility (EFSF), which will remain temporarily in place until June 2013. The ESM will be activated when the financial stability of the euro area as a whole is in jeopardy. Member countries in financial distress will receive financial assistance in the form of credit, subject to their fulfilment of strict conditions.