Article 125 of the Treaty on the Functioning of the European Union

Article 125 of the Treaty on the Functioning of the European Union (TFEU) prohibits the EU and member states from bailing out one another financially if a member faces bankruptcy. Essentially, it prevents the EU from using taxpayers' money to rescue a failing country directly. Instead, assistance must come through other legal and financial mechanisms, ensuring responsible fiscal management and avoiding moral hazard. This rule promotes financial stability and discipline across the Union by limiting EU-level interventions in member states' financial issues.