A&C INGL vol7 nº1_040213:Boceto2_EGAP_L 04/02/13 20:04 Page 7 JAVIER VILLAR BuRKE _European Commission _[134-161] Developing Europe’s financial “safety net” in a time of crisis & Abstract: This article explains how the deterioration in public finances and the developing sovereign crisis led to the creation of a European financial “safety net”. The different financial instruments (BoP, GLF, EFSM, EFSF, ESM) are the response to specific challenges and what was feasible at a given moment. The financial assistance architecture had to adapt quickly to a rapid evolution of the crisis. The roles of the IMF, the ECB and conditionality are also discussed. The article concludes that a necessary condition for the EU to overcome the crisis is better communication and a resolute deepening of European solidarity via new tools, structures, and frameworks. & & Key words: financial assistance, financial crisis, Euro Area, European Stability Mechanism. E-mail address:
[email protected]. Disclaimer: The opinions and statements expressed in this paper remain solely those of the author and do not necessarily reflect the views of the European Commission. The author would like to thank Ioana Diaconescu for her most valuable insights and assistance in completing this article; Fionnuala Bourke and Caroline Simpson for their comments to the manuscript; and Pieter Bouwen who helped gather the data on the use of the rescue mechanisms. Any remaining errors are strictly the fault of the author. Vol.7_n.º1_2012_ Administración & Cidadanía _ 7 A&C INGL vol7 nº1_040213:Boceto2_EGAP_L 04/02/13 20:04 Page 9 DEVELOPInG EuROPE’S FInAnCIAL “SAFETy nET” In A TIME OF CRISIS _J avier Villar Burke INDEX 1.