UPSC Prelims 2016 · Question 7 of 98

UPSC Prelims 2016 question on European Stability Mechanism

European Stability Mechanism', sometimes seen in the news, is

  1. an agency created by EU to deal with the impact of millions of refugees arriving from Middle East
  2. an agency of EU that provides financial assistance to eurozone countries
  3. an agency of EU to deal with all the bilateral and multilateral agreements on trade
  4. an agency of EU to deal with the conflicts arising among the member countries
Show answer

Answer: B. an agency of EU that provides financial assistance to eurozone countries

Verdict

The answer is that it is an agency of the European Union providing financial assistance to eurozone countries.

Analysis

The European Stability Mechanism provides financial assistance in the form of loans to eurozone countries in difficulty, and as new capital to banks in difficulty, which is why it featured constantly in reporting on the Greek bailout and the disbursal of rescue money. The refugee option describes the migration agencies of this period rather than a financial body. The trade option describes the European Commission's trade directorate. The conflict resolution option describes a dispute mechanism, whereas the word Stability here refers to financial stability.

Source

The Hindu report on the European Union beginning disbursal of Greek bailout money.

How to crack it

Read the noun in the institution's name for its domain, because Stability Mechanism is financial vocabulary, exactly as Financial Stability Board and Financial Stability and Development Council are. Then attach the body to the news event that put it in the paper, which here is the Greek sovereign debt crisis. Institution plus crisis plus function is the triplet worth logging whenever an unfamiliar European body appears in reporting.

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