The European Financial Stability Facility (EFSF) was created by the euro area Member States following the decisions taken on 9 May 2010 within the framework of the Ecofin Council. The EFSF’s mandate is to safeguard financial stability in Europe by providing financial assistance to euro area Member States within the framework of a macro-economic adjustment programme.

To fulfill its mission, EFSF issues bonds or other debt instruments on the capital markets. The proceeds of these issues are then lent to countries under a programme. The EFSF may also intervene in the primary and secondary bond markets, act on the basis of a precautionary programme and finance recapitalisations of financial institutions in non-programme countries through loans to governments.

EFSF was created as a temporary rescue mechanism. In October 2010, it was decided to create a permanent rescue mechanism, the European Stability Mechanism (ESM). The ESM entered into force on 8 October 2012.

From this date onwards, the ESM will be the main instrument to finance new programmes. In parallel to the ESM, the EFSF will continue with the ongoing programmes for Greece, Portugal and Ireland. The financial assistance for the recapitalisation of the Spanish banking sector will be transferred from EFSF to ESM.