Examining ‘Euro-Zone crises’ with the proposed ‘six pack solution’!
It is a set of legislative measures that gives European Commission the ability to impose sanctions on the Euro-zone countries that fail to control their debt and deficit. The rules are designed to prevent any future debt crisis of the present nature of thus give more sanctioning power to European Commission. The European Parliament has been given the right to call Finance Ministers from countries that have been warned. It also provides for European semester so as to annually assess national budgets.
The Stability and Growth Pact (SGP) is a rule based framework for the co-ordination of national fiscal policies in the Economic and Monetary Union (EMU). It was established to safeguard sound public finance, an important requirement for EMU to function properly. The pact consists of a preventive and a dissuasive arm.
Following nearly a year of haggling between the European Council and the European Parliament which saw MEPs make thousands of amendments to the original proposals-the so called six pack passed in a series of tight votes during the Strasbourg plenary session.
The legislation would discourage member states from evading their responsibilities to each other to ensure the stability of the Euro-zone. The rules would provide for enhanced monitoring and surveillance of imbalance like unemployment, credit growth and housing bubble etc. This would also give right signals to the financial markets about the seriousness of the EU and its resolve to handle any future debt crisis.