European reactions to the Eurozone crisis fall into three categories. First, rescue packages have been assembled to pull the worst-hit countries out of the most acute difficulties, and financial stability mechanisms have been established. The objective has not merely been to provide emergency assistance but also to avert contagion and to enhance the confidence of financial markets in the euro area’s ability to cope with the situation. Second, emergency measures and building financial and institutional capacity to meet future crises have been flanked by efforts to strengthen European economic governance. Here the aim has been to remedy the insufficiencies and inefficiencies of the Maastricht constraints on national fiscal economic policy which had proven unable to prevent turmoil erupting in Spring 2010. Third, interventions by the ECB have supported and complemented other emergency measures, at times even playing a decisive role. In the following, we shall outline the major developments on all three fronts and then turn to their constitutional analysis in Part II. As a prelude, we shall summarise European reactions to the financial turmoil which preceded the fiscal crisis.

Prelude: tackling the financial crisis

As late as June 2007, the ECB raised interest rates, which was a token that the upcoming financial crisis was not yet foreseen. The first larger-scale indications of the upcoming financial crisis only became apparent in the latter half of 2007. The ECB responded with a series of measures that were mainly intended to ease liquidity shortage and ensure market funding for banks. General announcements on liquidity policy were accompanied by fine-tuning operations addressing short-term nervousness in the money market. As these were considered insufficient, the ECB engaged in a series of ad hoc or supplementary measures to guarantee longer-term financing to the banking sector and to normalise conditions in the money market.