The European Financial Stability Facility (EFSF)

The EFSF was created in May 2010 in response to the unprecedented financial crisis that hit the EU. As part of a wider safety net, the objective of the EFSF is to preserve the financial stability of the Economic and Monetary Union by providing temporary stability support to euro area Member States, as in the case of Greece, Ireland and Portugal.

The EFSF provides financial assistance to euro area Member States, linked to appropriate conditionality. It obtains financing by issuing bonds or other debt instruments on the financial markets backed by guarantees of the shareholder Member States. These guarantees total €780 billion. The EFSF is mandated to provide financial assistance on a temporary basis and thus was able to enter into new programmes only until mid - 2013, when the European Stability Mechanism (ESM) took over in providing stability support to euro area Member States.