European Financial Stabilisation Mechanism
Encyclopedia
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. It runs under the supervision of the Commission and aims at preserving financial stability in Europe by providing financial assistance to member states of the European Union in economic difficulty.
The Commission fund, backed by all 27 European Union
members, has the authority to raise up to €60 billion. A separate entity, the European Financial Stability Facility
, is authorized to borrow up to €440 billion.
The EFSM is rated AAA by Fitch, Moody's
and Standard & Poor's
.
, 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. This implies borrowing costs for EFSM of 2.59%.
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
using the budget of the European Union as collateral. It runs under the supervision of the Commission and aims at preserving financial stability in Europe by providing financial assistance to member states of the European Union in economic difficulty.
The Commission fund, backed by all 27 European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
members, has the authority to raise up to €60 billion. A separate entity, the European Financial Stability Facility
European Financial Stability Facility
The European Financial Stability Facility is a special purpose vehicle financed by members of the eurozone to combat the European sovereign debt crisis. It was agreed by the 27 member states of the European Union on 9 May 2010, aiming at preserving financial stability in Europe by providing...
, is authorized to borrow up to €440 billion.
The EFSM is rated AAA by Fitch, Moody's
Moody's
Moody's Corporation is the holding company for Moody's Analytics and Moody's Investors Service, a credit rating agency which performs international financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized...
and Standard & Poor's
Standard & Poor's
Standard & Poor's is a United States-based financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for its stock-market indices, the US-based S&P 500, the Australian S&P/ASX 200, the Canadian...
.
2011 inaugural emission
On 5 January 2011, the European UnionEuropean Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, 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. This implies borrowing costs for EFSM of 2.59%.
See also
- European Financial Stability FacilityEuropean Financial Stability FacilityThe European Financial Stability Facility is a special purpose vehicle financed by members of the eurozone to combat the European sovereign debt crisis. It was agreed by the 27 member states of the European Union on 9 May 2010, aiming at preserving financial stability in Europe by providing...
- European Stability MechanismEuropean Stability MechanismThe European Stability Mechanism is a permanent rescue funding programme to succeed the temporary European Financial Stability Facility and European Financial Stabilisation Mechanism...
- Maiden Lane TransactionsMaiden Lane TransactionsMaiden Lane Transactions refers to three limited liability companies created by the Federal Reserve Bank of New York in 2008 as a financial vehicle to facilitate transactions involving three entities: the former Bear Stearns company as the first entity, the former American International Group's...
- Term Asset-Backed Securities Loan FacilityTerm Asset-Backed Securities Loan FacilityThe Term Asset-Backed Securities Loan Facility is a program created by the U.S. Federal Reserve to spur consumer credit lending. The program was announced on November 25, 2008 and was to support the issuance of asset-backed securities collateralized by student loans, auto loans, credit card...
- Troubled Assets Relief ProgramTroubled Assets Relief ProgramThe Troubled Asset Relief Program is a program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector that was signed into law by U.S. President George W. Bush on October 3, 2008...