The emergence of the new over-riding objective of financial stability

In this chapter, we argue that the concern for financial stability led to a drastic change in European integration, as from 2010 onwards it became an overriding objective not only for the EMU but indeed for the whole EU. Initially a political concept lacking clear legal definition, financial stability gradually made its way into the EU legal order, starting with appearances in international law treaties such as the Treaty on Stability, Convergence and Governance in the EMU (TSCG) and the European Stability Mechanism (ESM) Treaty. In a second step, it found its way to EU primary law through the new Article 136(3) TFEU until it was fully entrenched into the EU legal order through the CJEU case law. Because it is such a versatile concept, financial stability has justified very different measures to address financial and sovereign debt crises, ranging from innovative monetary policy programs and new financial assistance mechanisms for Member states in distress to reinforced central control over national budgets within the context of the European Semester. When approached together, these measures yield a framework that is generally inconsistent and can only be coherently reconstructed if financial stability is considered the keystone. Moreover, the overriding nature of the financial stability objective could create significant problems when other aims and objectives run counter to it - something that is likely to happen. In particular, firmly anchoring the objective of financial stability may pose major challenges for the advancement of social rights protections.