Conference Paper

The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, known also as the Fiscal Stability Treaty or EU Fiscal Pact, entered into force on 1 January 2013, following the successful ratification by twelve of the sixteen signatory states. The Treaty introduced new rules in the Euro Zone and into the EU as a whole. Establishing strict requirements for budget deficit, it calls for strong fiscal discipline and for real fiscal austerity in many EU member states. , which makes this Treaty one of the biggest challenges for the EU in its sixty-two years of history. From now on the budgets of the EU states will have to follow very specific fiscal objectives and criteria. The Treaty is a legally binding act that sets new pillars for building a new economic and political profile of the EU. Moreover, it will influence the countries, which have not signed the Treaty yet, such as the United Kingdom and the Czech Republic, as well as the candidate states. This paper tries to put more light on the prospects of the Fiscal Compact and the related measures and on their impact on the economic, legal and the political future of the Union. It focuses on the implementation challenges of the Treaty and the new measures that aim for stronger cohesion within the Euro zone and further afield.