EFSF

The European Financial Stability Facility, often abbreviated as EFSF, was a temporary entity created by the member states of the Eurozone in 2010 to provide financial assistance to countries facing severe debt crises. Its primary objective was to safeguard the financial stability of the Eurozone as a whole by providing loans to member states that were unable to access funding from the capital markets.

The EFSF was established through an intergovernmental treaty and was capitalized by guarantees from Eurozone member states. These guarantees allowed the EFSF to issue bonds in the financial markets, raising funds that could then be lent to distressed countries. The loans provided were subject to strict conditionality, requiring recipient countries to implement fiscal and economic reforms.

Key functions of the EFSF included providing loans for sovereign debt restructuring, recapitalizing banks, and supporting the purchase of government bonds. It played a significant role during the European sovereign debt crisis, offering crucial support to countries such as Greece, Ireland, and Portugal. The facility operated alongside other European stability mechanisms.

In 2012, the EFSF was superseded by the European Stability Mechanism (ESM), a permanent intergovernmental organization with a larger lending capacity. While the EFSF ceased to operate as a primary lending institution, it continued to manage its outstanding loans and bonds until their maturity. Its establishment marked a significant step in the Eurozone's efforts to address systemic financial risks.