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The European Financial Stabilisation Mechanism (EFSM) is an emergency funding programme reliant upon funds raised on the financial markets and guaranteed by the European Commission using the budget of the European Union as collateral.[1] It runs under the supervision of the Commission[2] and aims at preserving financial stability in Europe by providing financial assistance to member states of the European Union in economic difficulty.[3]
The Commission fund, backed by all 27 European Union member states, has the authority to raise up to €60 billion. The EFSM is rated AAA by Fitch, Moody's and Standard & Poor's.[4][5] The EFSM has been operational since 10 May 2010.[6]
Programmes
Irish programme
Under the programme agreed between the Eurozone and the government of Ireland, the EFSM wil provide loans of 22.4 billion euros between 2010 and 2013. As of January 2012 the EFSM had provided 15.4 bn. Further funds have also been provided through the EFSF[7]
Portuguese programme
Under the programme agreed between the Eurozone and the government of Portugal, the EFSM will provide loans of 26 billion euros between 2011 and 2014. As of January 2012 the EFSM had provided 15.6 bn. Further funds have also been provided through the EFSF[7]
Greece
In July 2015 the European Commission proposed to re-activate the EFSM to provide financing for a bridging loan to the government of Greece, in order to meet its immediate commitments including loan repayments to the IMF and ECB.[8] In August, the loan of around €7 billion was fully repaid by Greece.[9]
Operations
2011 inaugural issuance
On 5 January 2011, the European Union, under the European Financial Stabilization Mechanism, successfully placed in the capital markets a €5 billion issue of bonds as part of the financial support package agreed for Ireland. The issuance spread was fixed at mid swap plus 12 basis points.[10] This implies borrowing costs for EFSM of 2.59%.[11]
Subsequent issuances
- €4.75 bn 10 yr bond issued on 24 May 2011
- €4.75 bn 5 yr bond issued on 25 May 2011
- €5.0 bn 10yr bond issued on 14 Sept. 2011
- €4.0 bn 15yr bond issued on 22 Sept. 2011
- €1.1 bn 7yr bond issued on 29 Sept. 2011
- €3.0 bn 30 yr bond issued on 9 Jan. 2012
Bailout programs for EU members (since 2008)
The table below provides an overview of the financial composition of all bailout programs being initiated for EU member states, since the global financial crisis erupted in September 2008. EU member states outside the eurozone (marked with yellow in the table) have no access to the funds provided by EFSF/ESM, but can be covered with rescue loans from EU's Balance of Payments programme (BoP), IMF and bilateral loans (with an extra possible assistance from the Worldbank/EIB/EBRD if classified as a development country). Since October 2012, the ESM as a permanent new financial stability fund to cover any future potential bailout packages within the eurozone, has effectively replaced the now defunct GLF + EFSM + EFSF funds. Whenever pledged funds in a scheduled bailout program were not transferred in full, the table has noted this by writing "Y out of X".
| EU member | Time span | IMF[12][13] (billion €) |
World Bank[13] (billion €) |
EIB / EBRD (billion €) |
Bilateral[12] (billion €) |
BoP[13] (billion €) |
GLF[14] (billion €) |
EFSM[12] (billion €) |
EFSF[12] (billion €) |
ESM[12] (billion €) |
Bailout in total (billion €) |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Cyprus I1 | Dec.2011-Dec.2012 | – | – | – | 2.5 | – | – | – | – | – | 2.51 |
| Cyprus II2 | May 2013-Mar.2016 | 1.0 | – | – | – | – | – | – | – | 9.0 | 10.02 |
| Greece I+II3 | May 2010-Jun.2015 | 32.1 out of 48.1 | – | – | – | – | 52.9 | – | 130.9 out of 144.6 | – | 215.9 out of 245.63 |
| Greece III4 | Aug.2015-Aug.2018 | (proportion of 86, to be decided Oct.2015) |
– | – | – | – | – | – | – | (up till 86) | 864 |
| Hungary5 | Nov.2008-Oct.2010 | 9.1 out of 12.5 | 1.0 | – | – | 5.5 out of 6.5 | – | – | – | – | 15.6 out of 20.05 |
| Ireland6 | Nov.2010-Dec.2013 | 22.5 | – | – | 4.8 | – | – | 22.5 | 18.4 | – | 68.26 |
| Latvia7 | Dec.2008-Dec.2011 | 1.1 out of 1.7 | 0.4 | 0.1 | 0.0 out of 2.2 | 2.9 out of 3.1 | – | – | – | – | 4.5 out of 7.57 |
| Portugal8 | May 2011-Jun 2014 | 26.5 out of 27.4 | Zdroj:https://en.wikipedia.org?pojem=European_Financial_Stabilisation_Mechanism