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Before the ESM

EFSF - the temporary fiscal backstop

The European Financial Stability Facility (EFSF) was created as a temporary crisis resolution mechanism by the euro area Member States in June 2010. The EFSF has provided financial assistance to Ireland, Portugal and Greece. The assistance was financed by the EFSF through the issuance of EFSF bonds and other debt instruments on capital markets. The EFSF does not provide any further financial assistance, as this task is now performed solely by the ESM. Nevertheless, the EFSF continues to operate in order to:

  • receive loan repayments from beneficiary countries;
  • make interest and principal payments to holders of EFSF bonds;
  • roll over outstanding EFSF bonds, as the maturity of loans provided to Ireland, Portugal and Greece is longer than the maturity of bonds issued by the EFSF

The mission of both the EFSF and ESM is to safeguard financial stability in Europe by providing financial assistance to countries of the euro area. The two institutions have a different governance structure but share the same staff and offices located in Luxembourg. See below a representation of the EFSF governance set-up:


 

Before the ESM

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