(June 1, 2010) On May 7, 2010, Germany's President signed into law the Act on the Providing of Loan Guarantees to Support the Solvency of the Hellenic Republic Required to Maintain Financial Stability Within the Currency Union (BUNDESGESETZBLATT I at 537). Through this Act, Germany promises to provide a total of €22.4 billion (about US$27.5 billion) as Germany's contribution to the €110 billion (about US$135.9 billion) financing plan that had been agreed to on May 2 between Greece, the International Monetary Fund (IMF), the European Union, and the euro zone member states (International Monetary Fund, Europe and IMF Agree €110 Billion Financing Plan With Greece, May 2, 2010, IMF website, available at http://www.imf.org/external/pubs/ft/survey/so/2010/car050210a.htm). The German guarantees are to be made available over the next three years.
On May 22, 2010, Germany made an even bigger contribution to the overall stability of the euro zone when Germany's President signed into law the Act on the Providing of Loan Guarantees Within the Framework of the European Stabilization Mechanism (BUNDESGESETZBLATT I at 627). The Act authorizes the German Federal Minister of Finance to guarantee loans taken up by a society newly founded by the member states of the euro zone to serve as a special-purpose vehicle to shore up the solvency of a member state, if needed. The German loan guarantees are authorized up to an amount of €123 billion (about US$150.8 billion), and the sunset day for the granting of new guarantees is June 30, 2013.
The German legislation contains the German contribution to the European Stabilization Mechanism, a packet of measures agreed upon by the Council of the European Union to ensure the financial stability of the euro zone members (Press Release, Council of the European Union, Extraordinary Council Meeting Economic and Financial Affairs Brussels, 9/10 May 2010 (May 9, 2010), available at http://europa.eu/rapid/pressReleasesAction.do?reference=PRES/10/108&
format=HTML&aged=0&language=EN&guiLanguage=en; see also Theresa Papademetriou, European Union: Response to Financial Crisis in Greece, GLOBAL LEGAL MONITOR, May 19, 2010, available at http://www.loc.gov/lawweb/servlet/lloc_news?disp3_l205401990_text.)
The German loan guarantees are in proportion to Germany's shares in the European Central Bank (Germany Accepts Loan Guarantees to Shore up the Euro, May 21, 2010, Bundesregierung [Federal Government] website, available at http://www.bundesregierung.de/Content/EN/Artikel/2010/05/2010-05-21-gese
tz-schutzschirm__en,layoutVariant=Druckansicht.html.) As intended by the European Stabilization Mechanism, the German loan guarantees will only be made available if there is unanimity among the stakeholders that a euro zone member's solvency needs shoring up and only after funds set aside by the European Union and the International Monetary Fund have been exhausted. The ceiling on loan-guarantees that euro-zone member states will provide through June 30, 2012, is €440 billion. (Id.)