In this article, We learn about "European Financial Stability Facility ".Let's Go!
The European Financial Stability Facility (EFSF) is a temporary crisis resolution mechanism established by euro area countries in 2010 in response to the European sovereign debt crisis.
Its main objective is to provide financial assistance to euro area member states experiencing severe economic difficulties or facing financial instability.
The EFSF aims to maintain financial stability within the euro area by issuing bonds and other debt instruments on capital markets, raising funds that can be used to provide loans to countries in need, recapitalize banks or purchase sovereign debt.
The EFSF operates under the guidance of the European Financial Stability Facility Framework Agreement, which outlines its operating procedures, governance structure and decision-making processes.
The loan is guaranteed by participating euro area member states, which determines its overall lending capacity.
In 2012, the EFSF was replaced by the European Stability Mechanism (ESM), a permanent financial aid agency with greater lending capacity and a wider range of tools to respond to financial crises.
The ESM aims to improve the euro area’s resilience to financial shocks and ensure the long-term stability of the European financial system.
While the EFSF no longer offers new financial aid programs, it continues to administer existing financial aid programs that were extended to Ireland, Portugal and Greece prior to the establishment of the ESM.
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