European Financial Stability Fund

What is the European Financial Stability Fund?
The European Financial Stability Fund or European Financial Stability Facility, known by the acronym EFSF or its Spanish acronym EFSF is an organization whose aim is to ensure financial stability in Europe.

Created on May 9, 2010 with approval of all Member States of the European Union. It is headquartered in Luxembourg and the European Investment Bank is contracted to provide services in administrative and management issues.

Role of EFSF
The EFSF provides funding to countries in financial crisis through the issuance of bonds and other debt instruments in the market. That is, raises the necessary funds to provide loans to euro area countries in financial trouble, the recapitalization of banks sovereign debt or purchase through the German Office of Debt Management . Bonds issued by the EFSF backed guarantees granted by the Member States of the euro area.

The EFSF financial security you can get up to 750 billion euros of funds combining European Financial Stabilisation Mechanism (up to 60 billion euros, depends on funds raised by the European Commission and has the guarantee of the budget of the European Union) and money from the International Monetary Fund (IMF to 250 billion euros).

The EFSF close in three years if no financial transaction, if not close when the loan is repaid in full.

The European Financial Stability Fund provides credit assistance after a request by a member state of the eurozone. The European Commission, together with the European Central Bank and the IMF negotiated a financial program for the country to be approved unanimously by the Eurogroup (finance ministers from the euro area). The country requesting assistance must accept this program and assist in their development and only then can receive the loan. This process is initiated only if the country can not raise money in the markets at acceptable rates.

EFSF has obtained the best credit rating possible: AAA by Standard & Poors and Fitch Ratings, Aaa by Moody.

EFSF is a Luxembourg-based company registered property of the Member States of the euro area. It is headed by Klaus Regling, former Director-General for Economic and Financial Commission.