This framework includes legal provisions that preclude monetary financing of governments, strict fiscal rules laid down in the Stability and Growth Pact and the “no bailout” clause, which, by ensuring that each country ultimately has to bear the consequences of its own fiscal policy, is an indispensable prerequisite for sound public finances within the euro area.
The severity of the sovereign debt crisis in some member states and the imminent risks of contagion for other member states, however, have threatened financial stability within the European Monetary Union as a whole. The European Council therefore agreed that financial assistance should be granted to countries with severe refinancing problems, a substantial part of which is provided by Germany.