Financial Assistance to Non-Euro Area Member States
The historic financial crisis that began on the American housing market in 2007 and from there spread all over the globe had tremendous consequences for more or less every country worldwide, especially for their respective public finances. The overall public debt level skyrocketed due to the substantial economic downfall and the necessity to bail out hundreds of financial institutions that had suffered severe losses when the American subprime market collapsed and the money markets froze. Though the States were (with tremendous help by the European Central Bank) finally successful in preventing a complete breakdown of the major financial markets, their intervention left the national budgets and the balance of payments (BOP) of several of them in a devastating condition with insolvencies only being averted by massive external and mainly financial assistance by other States and institutions (especially the International Monetary Fund (IMF)). Some of these states facing such a financial calamity were Member States of the European Union (EU)—a fact having an important normative implication: Other Member States wanting to help financially were bound by the normative framework of the European Union Treaties. And the same was obviously true for the European Union itself where it wanted to initiate any form of (financial) assistance.