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Glossary

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Debt relief

The adoption of measures to provide a beneficiary country with relief, either fully or partially, from a debt burden. Debt relief can take a number of forms, including: reducing the outstanding principal amount (either partly or fully), lowering the interest rate on loans due, extending the term of the loan.

Direct Recapitalisation Instrument

A financial assistance instrument that allows the ESM to recapitalise a systemic euro area bank directly, by purchasing an equity stake in the bank. This is only possible under specific circumstances as a last resort measure, when the bail-in of private investors and the contribution of the Single Resolution Fund are not sufficient to restore the bank to viability. The instrument was adopted in December 2014.

Disbursement

The payment of a specified amount of money. When the ESM makes a loan disbursement, it pays out part of the total loan amount to a beneficiary country.

Diversified funding (strategy)

A strategy that uses a variety of financial instruments and maturities to ensure the efficiency of funding. One feature of this strategy is that funds raised through various instruments are not attributed to a particular beneficiary country. The funds are pooled and then disbursed to programme countries. The size and maturity of the bonds and bills issued therefore do not need to match exactly the size and maturity of the disbursements to a beneficiary country.

DMO (debt management office)

A government agency that is responsible for the issue of debt securities and the management of a country’s debt.

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