Reuters: EU's top court rules ESM fund compatible with EU law

27 November 2012

The European Union's highest court ruled on Tuesday that the eurozone's permanent bailout fund, the European Stability Mechanism (ESM), was in line with European law, despite a challenge by an Irish lawmaker.

The Irish court asked the European Court of Justice (ECJ) for clarity on the matter when it rejected an attempt earlier this year to force a referendum on Ireland's ratification of the bailout fund.

Ireland does not have a veto over the ESM treaty, which took effect in October after approval by 90 per cent of the eurozone capital base, giving the fund a lending capacity that will total €500 billion. The rescue mechanism for the 17 eurozone countries is to be used to lend to distressed sovereigns in return for strict fiscal and structural reforms.

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