[3] This threshold was surpassed with Germany's completion of the ratification process on 27 September 2012, which brought the treaty into force on that date for sixteen of the seventeen members of the eurozone.

However, the last of the then-27 European Union member states to complete their ratification of this amendment, the Czech Republic, did not do so until 23 April 2013, postponing its entry into force until 1 May 2013.

ESM bailouts are conditional on member states first signing a memorandum of understanding, outlining a programme for the needed reforms or fiscal consolidation to be implemented in order to restore the financial stability.

However, the EFSF and EFSM were intended only as a temporary measure (to expire in 2013), in part due to the lack of a legal basis in the EU treaties.

The treaty would be designed so there would be no need for referendums, providing the basis for a speedy ratification process, with the aim to have it completely ratified and come into force in July 2012.

[citation needed] The ESM established by the intergovernmental treaty was designed to be fully compatible with existing EU law, and the European Court of Justice ruled in November 2012 - that "the right of a Member State to conclude and ratify the ESM Treaty is not subject to the entry into force" of the TFEU amendment.

[22] The TFEU amendment came into force on 1 May 2013, after the Czech Republic became the last member state to ratify the agreement according to its respective constitutional requirements.

Formally, two treaties with this name were signed: one on 11 July 2011 and one on 2 February 2012, after the first turned out not to be substantial enough the second version was produced to "make it more effective".

[23] The 2012 version was signed by all 17 Eurozone members on 2 February 2012, and was planned to be ratified and enter force by mid-2012, when the EFSF and EFSM were set to expire.

[4] Latvia's adoption of the euro on 1 January 2014 was given final approval by the Economic and Financial Affairs Council on 9 July,[26][27] making them eligible to apply for ESM membership.

[4] To support member states hit by the COVID-19 pandemic, the European Council suspended fiscal rules – including the ESM - applying the general escape clause of the Stability and Growth Pact on 23 March 2020[31] and agreed to a massive recovery fund of €750 billion, branded Next Generation EU (NGEU), on 23 July 2020.

[34][35] The NGEU fund is about investment to meet the covid19-caused economic downturn the reputation of the ESM is about bailing out private banks increasing public debt and thus causing disinvestment.

[36] In June 2015, an updated EMU reform plan was released which envisaged that in the medium-term (between July 2017 and 2025) the ESM should be transposed from being an intergovernmental agreement to become fully integrated into the EU law framework applying to all eurozone member states under the competence provided for by the amended article 136 of the TFEU by 2025.

ESM bailouts are conditional on member states first signing a memorandum of understanding (MoU), outlining a programme for the needed reforms or fiscal consolidation to be implemented in order to restore the financial stability.

Another precondition for receiving an ESM bailout, starting from 1 March 2013, will be that the member state must have fully ratified the European Fiscal Compact.

[48][49] Countries receiving a precautionary programme rather than a sovereign bailout, will per definition have complete market access and thus qualify for OMT support if also suffering from stressed interest rates on its government bonds.

In regards to countries receiving a sovereign bailout (Ireland, Portugal and Greece), they will on the other hand not qualify for OMT support before they have regained complete market access, which the ECB define as the moment when the state succeeds to issue a new ten-year government bond series at the private capital market.

[60] The Troika currently negotiates with Spain and Cyprus, about setting up an economic recovery programme in return of providing support with financial loans from ESM.

[62] If Spain will apply and receive a PCCL package, irrespectively to what extent it subsequently decides to draw on this established credit line, this would at the same time immediately qualify the country also to receive "free" additional financial support from ECB, in the form of some yield-lowering bond purchases (OMT).

[132] Think-tanks such as the World Pensions Council (WPC) have argued that the European Stability Mechanism is the product of a short-term political consensus, and thus will not be conductive of a durable, cohesive institutional solution.

[135][136] As a result the Italian government has been blocking the negotiations of a proposed reform of the ESM Treaty for several months at the Eurogroup level.

Geert Wilders' Party for Freedom opposes any increase or systematisation of transfer payments, from the Netherlands to other EU countries, through means such as the ESM.

[143] The New Hanseatic League, established in February 2018 by like-minded finance ministers from Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, the Netherlands and Sweden,[144][145] is pushing to develop the European Stability Mechanism into a full European Monetary Fund that would redistribute wealth from trade surplus to trade deficit EU member states.