This paper analyzes what has been the EU institutional reaction to the Euro-area sovereign debt problems, focusing in particular on the new architecture designed to avert a financial crisis. It analyses (i) the European Financial Stabilization Mechanism (EFSM), an EU financial assistance feature available to all 27 member states, (ii) the European Financial Stabilization Facility (EFSF), a temporary credit-enhanced SPV with minimal capitalization created to raise funds from the capital markets (via an investment grade rating) and provide financial assistance to distressed EAMS at comparatively lower interest rates, and (iii) the European Stability Mechanism (ESM), an intergovernmental organization under public international law. Finally, some concluding remarks are provided.