European reforms to limit the financial crisis risks
Economic governance strengthens(4)
The economic governance “six pack” will allow the European Commission to take action when dealing with member States of the Euro area with unsustainable budgetary (distinctions to be drawn between “healthy” and “unhealthy” expenditure) and macro-economic policies (accountability of decision-makers).
This agreement aims to strengthen the rules of the Stability and Growth Pact (budget deficits below 3% of GDP; government debts below 60% of GDP). Until now, the rules gave importance to budget deficits reduction. Those new rules will give importance to debt reduction also.
The European directive on the draft bank recovery will introduce the “bail-in” principle by January 2016. It ensures that taxpayers will not be first in line to pay for bank failures.