Stabilisation Function (Communication)

The EU Commission wants to use a "stabilisation function" to protect Member States, and particularly eurozone countries, from the consequences of an economic shock. For this purpose, it has submitted a Communication which has been taken up by the German grand coalition. Although the stabilisation function reduces the risk of a state having to apply for financial aid, cep nevertheless takes a critical view of the idea.


cep complains that payments from the stabilisation function could delay necessary structural reforms in the affected states and considers it to be ill-conceived that countries in receipt of such funds do not have to implement any reforms. Since payments also include ESM loans, the stabilisation function undermines the basic principle of the ESM that loans are only granted in return for tough reforms. cep believes that no state will subject itself to an ESM reform programme if it can obtain such a loan without making reforms.