UPSC Prelims 2016 GS Paper I · Q82 of 100 Economy easy

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

  1. (a) agency created by EU to deal with the impact of millions of refugees arriving from Middle East
  2. (b) agency of EU that provides financial assistance to eurozone countries ✓ UPSC's answer
  3. (c) agency of EU to deal with all the bilateral and multilateral agreements on trade
  4. (d) agency of EU to deal with the conflicts arising among the member countries

Why the answer is (b)

• The European Stability Mechanism (2012), based in Luxembourg, is the eurozone's permanent crisis-resolution fund with €500 billion lending capacity; it gives loans and financial assistance to euro-area countries in difficulty, as it did for Greece, Cyprus and Spain's banks — option (b).

• Refugees (a), trade agreements (c) and inter-member conflicts (d) are handled by other EU bodies.

• Hence option (b).

Why the other options are wrong

(a) agency created by EU to deal with the impact of millions of refugees arriving from Middle…
ESM does not deal with refugees.
(c) agency of EU to deal with all the bilateral and multilateral agreements on trade
ESM does not handle trade agreements.
(d) agency of EU to deal with the conflicts arising among the member countries
ESM does not resolve member conflicts.

Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2016, held on 7 August 2016. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.

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