The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (popularly known as the "fiscal compact") entered into force on 1 January 2013 following its ratification by Finland. The treaty aims to strengthen fiscal discipline in the euro area through the "balanced budget rule" and the automatic correction mechanism.

For the treaty to enter into force, it had to be ratified by 12 euro area member states. This condition was met when Finland, the twelfth euro area member state to ratify the treaty, deposited its instrument of ratification on 21 December 2012. The treaty is legally binding as an international agreement and is open to EU countries which did not sign it at the outset. The treaty was conceived following the decision by euro area leaders in December 2011 that stronger measures were needed to reinforce stability in the euro area. It was signed on 2 March 2012 by 25 EU countries. The idea is to incorporate it as soon as possible into the existing EU treaties. The necessary steps for doing so should be taken within next five years.