Stability And Growth Pact - SGP

Definition of 'Stability And Growth Pact - SGP'


An agreement between the 16 countries that form the European Union (EU) and use the euro as currency. The SGP, enacted in 1997, was created to establish rules to ensure that all involved countries help maintain the value of the euro by enforcing fiscal responsibility. Specifically, each country must maintain an annual budget deficit that is no greater than 3% of GDP, and each must have a national debt that is lower than 60% of GDP.

Investopedia explains 'Stability And Growth Pact - SGP'


The SGP was established in the hopes of unifying the eurozone's financial policies to enable a strong euro. The European Commission is charged with enforcing the SGP and has been criticized for being too lenient by not imposing penalties on countries that have not operated within the rules. The goal of the SGP is for the eurozone members to reach what is called "economic and monetary union" (EMU) with low inflation, low interest rates, and controlled debt and spending.



comments powered by Disqus
Hot Definitions
  1. Federal Reserve Note

    The most accurate term used to describe the paper currency (dollar bills) circulated in the United States. These Federal Reserve Notes are printed by the U.S. Treasury at the instruction of the Federal Reserve member banks, who also act as the clearinghouse for local banks that need to increase or reduce their supply of cash on hand.
  2. Benchmark Bond

    A bond that provides a standard against which the performance of other bonds can be measured. Government bonds are almost always used as benchmark bonds. Also referred to as "benchmark issue" or "bellwether issue".
  3. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures.
  4. Oil Reserves

    An estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, if oil pools are located at unattainable depths, they would not be considered part of the nation's reserves.
  5. Joint Venture - JV

    A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
  6. Aggregate Risk

    The exposure of a bank, financial institution, or any type of major investor to foreign exchange contracts - both spot and forward - from a single counterparty or client. Aggregate risk in forex may also be defined as the total exposure of an entity to changes or fluctuations in currency rates.
Trading Center