MEPs have backed Commission plans to raise the ceiling for financial assistance to non-euro area Member States facing balance of payments difficulties from €12 to 25bn. They rejected, however, the idea of giving the Commission the power to decide on further changes to the ceiling without new legislation.

An EU law from 2002 established a facility providing medium-term financial assistance for Member States balances of payments, replacing previous rules from 1969. This facility is provided for in the Treaty (Article 119), whereby the EU can grant mutual assistance to a Member State "in difficulties or seriously threatened with difficulties as regards its balance of payments either as a result of an overall disequilibrium in its balance of payments or as a result of the type of currency at its disposal", provided this Member State does not belong to the euro area.

Support of €6.5 billion – more than half the total currently available under this scheme – has recently been proposed for Hungary.

The 2002 regulation lowered the ceiling on such funding to €12 billion, from €16 billion, as at the time there were only three Member States outside the euro area. Recent events suggest this may not be enough, should several Member States need significant support. The Commission is therefore proposing to raise this ceiling to €25 billion - and Parliament gave its backing to this change.

MEPs willing to act quickly, but not to give Commission power to act alone

The Commission also proposed that it be granted the power to decide a further revision of the ceiling in urgent cases. Parliament did not support this, but included a statement indicating its willingness to act quickly on such decisions that might be necessary in the future. It also said that the Commission should as a matter of course review the ceiling for support every two years.

Parliamentary procedure

In a resolution also adopted today, MEPs say non-euro EU countries who need such support should first look to the EU before approaching international bodies. They argue that the current situation demonstrates the protective effect of the euro, and encourage all non-euro Member States to adopt the euro as soon as they meet the criteria.

MEPs also want the Commission to examine how the behaviour of individual banks moving assets from Hungary after other Member States announced banking rescue plans has affected Hungary's balance of payments and to study the impact of speculative attacks on national currencies of new Member States and what might be done to prevent a drastic erosion of confidence in their banking systems in such circumstances.

The resolution was adopted with 491 votes in favour, 13 against and 24 abstentions.