It is now clearer than before that well-defined procedures need to be established to provide temporary financial assistance under clear and enforceable conditionality. The EFSF is an important step in this direction. In order to guarantee an incentive-compatible scheme, the EFSF has been associated with efforts in strengthening policy coordination in the EU.
The crisis has confirmed that the reasons underlying the introduction of EMU fiscal rules (externalities of deficits and debts, pressure for bail out, moral hazard in fiscal policy) are still very relevant, as national rules and financial market discipline do not necessarily deliver sound policies. EU fiscal rules are warranted and should be strengthened.