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ESM

Although Italy's Mario Monti is pushing hard, Angela Merkel does not want to give in on German key objectives for Europe such as stability and accountability. (Photo: consilium)

Merkel says European banking union is a future task, not to happen soon

German Chancellor Angela Merkel is not willing to move ahead quickly with allowing direct aid for European banks from either EFSF or ESM. Instead, she confirmed that every state will have to guarantee for its banks. This will lead to higher deficits in states where banks need to apply for money from the bailout funds.

If Italy fails, Angela Merkel will have a lot to explain to the German public. (Photo: consilium)

Open Europe: If Italy needs a bailout, sentiment in Germany will change

Pieter Cleppe from London based think tank Open Europe expects the ESM to get started despite growing political concern in several Euro countries. However, he thinks the ESM is too small to save the Euro.

German chancellor Angela Merkel and José Manuel Barroso, president of the EU commission, have spent quite some time in elaborating the ESM treaty. (Photo: consilium)

Citi: No subordination for European taxpayers in ESM legal framework

In an analysis, Citi concludes that the current legal framework for the ESM does not offer special protection for taxpayers as suggested to the German parliament ahead of last week's vote. The subordination clause would trigger the CDS, why such a protection is legally not possible without blowing up the system. German politics finds itself under scrutiny over not telling parliament the truth.

The German constitutional court held a hearing over whether the ESM is conflicting the German constitution.

German constitutional court shys away from ruling over ESM

The German constitutional court did not come up with a ruling over the question whether the European Stability Mechanism (ESM) conflicts with the German constitution. The hearing held in Karlsruhe showed the judges being overwhelmed by the complexity of legal challenges created by hasty decisions by leaders from the Euro zone.