The European Council meeting in Brussels in the evening of 16 December agreed on the limited Treaty amendment required for Member States to establish a permanent mechanism to safeguard the financial stability of the Eurozone. Heads of State or Government also confirmed the general features of that permanent mechanism and outlined the follow-up of the overall economic strategy which the European Council has been pursuing since the start of the year.

Member States agreed that those countries whose currency is the Euro will be able to establish a stability mechanism to be activated if indispensable to safeguard the stability of the Euro area as a whole. This decision follows up president Van Rompuys's consultations with members of the European Council after the October meeting regarding the required Treaty amendment.

The text of the agreement establishes that the granting of any required financial assistance under the mechanism will be made subject to strict conditionality. Given that the amendment will not increase the competence of the Union and only affect the members of the Eurozone themselves, it was very quickly decided to use a simplified revision procedure.

The aim is for the amendment to enter into force on 1 January 2013 at the latest, so that the  permanent mechanism itself can be in place in June 2013.

Second, concerning the features of the stability mechanism. In October, the Commission was asked  to undertake the preparatory work. In the meantime, that part of the work has been accelerated,  resulting in a statement by the Eurogroup Finance Ministers on 28 November.

The Council also endorsed the statement made by Eurogroup on 28 November resulting from the preparatory works concerning the features of the stability mechanism. The future European Stability Mechanism will be designed on the basis of the current mechanism, so International Monetary Fund involvement is foreseen.

As regards the role of the private sector, the EU will continue to adhere strictly to standard IMF and international practices. Decisions will thus be taken on a case by case basis and private sector involvement will not be a prior requirement for support under the future Stability Mechanism.

The European Council has requested the other institutions to make sure that all the decisions adopted in October regarding the Stability Pact and macro-economic surveillance will be in place by summer 2011 and agreed to conduct new stress tests in the banking sector to ensure full transparency in the broader context of the EU annual exercise. It also expressed its support to the European Central Bank in its independent responsibility to ensure price stability, solidly anchored inflation expectations and thereby contribute to financial stability of the Euro area.