European Financial Stabilisation Mechanism
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The European Financial Stabilisation Mechanism (EFSM) is an emergency funding programme reliant upon funds raised on the financial markets and guaranteed by the
European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...
using the budget of the European Union as collateral. It runs under the supervision of the Commission and aims at preserving financial stability in Europe by providing financial assistance to member states of the European Union in economic difficulty. The Commission fund, backed by all 27
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
member states, has the authority to raise up to €60 billion. The EFSM is rated AAA by Fitch,
Moody's Moody's Investors Service, often referred to as Moody's, is the bond credit rating business of Moody's Corporation, representing the company's traditional line of business and its historical name. Moody's Investors Service provides internationa ...
and Standard & Poor's. The EFSM has been operational since 10 May 2010.


Programmes


Irish programme

Under the programme agreed between the Eurozone and the government of Ireland, the EFSM wil provide loans of 22.4 billion euros between 2010 and 2013. As of January 2012 the EFSM had provided 15.4 bn. Further funds have also been provided through the EFSF


Portuguese programme

Under the programme agreed between the Eurozone and the government of Portugal, the EFSM will provide loans of 26 billion euros between 2011 and 2014. As of January 2012 the EFSM had provided 15.6 bn. Further funds have also been provided through the EFSF


Greece

In July 2015 the European Commission proposed to re-activate the EFSM to provide financing for a bridging loan to the government of Greece, in order to meet its immediate commitments including loan repayments to the IMF and ECB. In August, the loan of around €7 billion was fully repaid by Greece.


Operations


2011 inaugural issuance

On 5 January 2011, the
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
, under the European Financial Stabilization Mechanism, successfully placed in the capital markets a €5 billion issue of bonds as part of the financial support package agreed for Ireland. The issuance spread was fixed at mid swap plus 12 basis points. This implies borrowing costs for EFSM of 2.59%.


Subsequent issuances

* €4.75 bn 10 yr bond issued on 24 May 2011 * €4.75 bn 5 yr bond issued on 25 May 2011 * €5.0 bn 10yr bond issued on 14 Sept. 2011 * €4.0 bn 15yr bond issued on 22 Sept. 2011 * €1.1 bn 7yr bond issued on 29 Sept. 2011 * €3.0 bn 30 yr bond issued on 9 Jan. 2012


Bailout programs for EU members (since 2008)


See also

*
European Financial Stability Facility The European Financial Stability Facility (EFSF) is a special purpose vehicle financed by members of the eurozone to address the European sovereign-debt crisis. It was agreed by the Council of the European Union on 9 May 2010, with the objectiv ...
*
European Stability Mechanism The European Stability Mechanism (ESM) is an intergovernmental organization located in Luxembourg City, which operates under public international law for all eurozone member states having ratified a special ESM intergovernmental treaty. It was ...
*
European Fiscal Union The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union; also referred to as TSCG, or more plainly the Fiscal Stability Treaty is an intergovernmental treaty introduced as a new stricter version of the Stability ...
* List of acronyms: European sovereign-debt crisis *
Maiden Lane Transactions Maiden Lane Transactions refers to three limited liability companies created by the Federal Reserve Bank of New York in 2008 as a financial vehicle to facilitate transactions involving three entities: the former Bear Stearns company as the first en ...
*
Term Asset-Backed Securities Loan Facility The Term Asset-Backed Securities Loan Facility (TALF) is a program created by the U.S. Federal Reserve (the Fed) to spur consumer credit lending. The program was announced on November 25, 2008, and was to support the issuance of asset-backed secu ...
*
Troubled Assets Relief Program The Troubled Asset Relief Program (TARP) is a program of the United States government to purchase toxic assets and equity from financial institutions to strengthen its financial sector that was passed by Congress and signed into law by President ...


References

{{European Union topics, state=collapsed Eurozone Policy and political reactions to the Eurozone crisis de:Europäischer Stabilisierungsmechanismus