(CN) - European areas hardest hit by the economic crisis will soon see $850 billion in bailout money after members ratified a treaty nine months ahead of schedule.
The board of governors for the new European Stability Mechanism held its first meeting on Oct. 8, the European Council announced.
An intergovernmental institution based in Luxembourg, the group takes over the responsibilities of two agencies: the European Financial Stability Facility and the European Financial Stabilization Mechanism.
Lawmakers said the new entity will provide financial assistance to euro zone member states experiencing or threatened by severe financing problems that might undermine the stability of the EU as a whole.
Eurogroup - a cabinet of finance ministers from across the EU - agreed to raise the lending ceiling to $850 billion from $600 billion earlier this year. Europe plans to fund the new mechanism in stages, with full funding completed by mid-2014.
The 17 EU member states are responsible for funding, lawmakers say. The new agency will offer precautionary loans, recapitalization loans to banking institutions and bond market purchases.
Bailouts will not come easily or for free, lawmakers said.
Member states must have ratified a "fiscal compact" by March 1, 2013, to qualify for assistance, and they must also sign a balanced-budget rule in their own national legislatures.
The European Council said that the mechanism will reach most of its decisions by mutual agreement. A decision to grant emergency aid requires an 85 percent majority and can be used only if both the European Commission and European Central Bank conclude that failing to adopt the decision would threaten the economic and financial stability of the euro area.
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