Thursday, March 7, 2013

European Financial Stability Fund



The European Financial Stability Fund (EFSF) commonly known as European Relief Fund is a mutual fund claims approved by the 27 Member States EU May 9, 2010, to preserve financial stability in Europe by providing financial assistance to states in the Euro area economic difficulty. The EFSF has its headquarters in Luxembourg. The European Investment Bank provides cash management services and administrative management in the framework of a service contract. Created May 9, 2010, the EFSF could not be intervening after having been ratified by 90% of Member States; this threshold has been reached on 4 August 2010.

The agreement was ratified by the three Member States (Belgium, Slovenia and Slovakia) in early December 2010. Following the summit of the Euro group of 11 March 2011 bringing together the leaders of the Euro area, an agreement was reached to increase the effective capacity of the EFSF intervention to 440 billion Euros, with an increase guarantees the states of the Euro area. Moreover, since the summit, the EFSF has the right to buy the primary debt, that is to say, newly issued, states. Thursday 21 July 2011, the European decided to expand the EFSF's role: it can now buy government bonds on the secondary market, participate in the rescue of troubled banks lend to States in a difficult situation. Its action is subject to the unanimous opinion of the participating countries and the European Central Bank.

 These provisions do not come into effect after ratification by national parliaments. The first bonds of the European Financial Stability Facility were issued on 25 January 2011. The EFSF placed its first five-year bonds for an amount of 5 billion Euros in financial support joint EU / IMF to Ireland. Investor interest was exceptionally strong, with an order book of 44.5 billion Euros sales offers. If the EFSF has not been activated, it would end after three years, that is to say on 30 June 201 3. The Fund will exist until the last obligation has been fully repaid. Both funds will be replaced in 2013 by the European Stability Mechanism.

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