On May 9, 2010 the 27-member European Union agreed to establish a fund called European Financial Stability Fund (EFSF), whose purpose was to help and provide financial assistance to member states that were in financial difficulties.
The European Financial Stability Fund:
The fund is itself a limited partnership, based in Luxembourg, which uses the European Investment Bank as the administrative arm and administrator of the treasure. The fund is permitted to issue, together with the German Debt Management, bonds or other instruments available in the market to raise funds to finance loans to member states of the Euro zone who are in financial difficulties, or inject capital into banks problems or also buy sovereign debt.
The bond issues are guaranteed by each member state according to the proportion of capital contribution with the European Central Bank (ECB). The total funds are 650,000 million euros, of which 60,000 million are in the form of loans from the European Financial Stability Mechanism (EFSM) and € 250,000 million International Monetary Fund (IMF) plus € 440,000 million member states.
The fund is short term and has established June 30, 2013 as the closing date. However, if there are outstanding financial obligations, the fund would be closed when such obligations are met.
The mechanism can only be set up at the request of a member which is in difficulties and need financial aid. The member of the state has to negotiate with the European Commission together with the IMF terms and conditions, and then has to obtain the final agreement of the Eurogroup (the finance ministers of countries that have the euro as their currency). A member shall not solicit state assistance if unable to borrow money in the forex market at a reasonable rate. A member state to enter a program EFSF will have to accept in your country outside experts from the IMF, the ECB and the Commission to help establish the mechanisms for program support.
The EFSF has a CEO and a board of senior executives representing the 16 Euro zone members, including ministers and senior officials.
To facilitate the collection of money, got a rating EFSF triple major rating agencies: Standard and Poor's, Moody's and Fitch.
The first bond issue of EFSF, 5,000 million euros, was managed by three banks, Citibank, HSBC and Societe General, and was proposed as part of the package of support from the EU and IMF to Ireland. The subscription exceeded the emission by more than 35,000 million at an interest rate of 2.89% exceptionally good
To learn more about currencies, you can read the history of the U.S. dollar.
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