European Financial Stability Facility
10 May 2010 the European Union established a "European Financial Stability Facility" with a total value of €750 billion to rescue Greece and other Euro-member states with economic difficulties.
The €750 is composed of €440 billion from the Eurozone member states plus Sweden and Poland, €60 billion governed by the European Commission from the joint EU budget and €250 billion from the International Monetary Fund, IMF.
The new organisation will have its seat in Luxembourg and led by Klaus Regling, former employee of the European Commission. In May 2010 Greece received €110 billion as a 5% loan from IMF and the Eurozone countries.
According to the Bank for International Settlements, BIS, Eurozone banks had a total of $1,579 billion at the end of 2009 in exposure to Greece, Ireland, Portugal and Spain.
These four countries are most exposed in the EU "sovereign debt crisis", arising from their large public sector deficits
French and German banks accounts for 61% of this debt. Including state guarantees the French risk was $493 billion and the German $465 billion. In Spain the exposure by French banks was $248 billion and by German banks $202 billion.
These two countries therefore had a strong interest in the joint EU scheme where all Eurozone member states share the costs of preventing default by banks in other EU countries that owed them money or a run on their own banks by their own and foreign depositors and investors.
See also
Greek debt crisis
Economic and Monetary Union
Links
Press release from ECOFIN meeting
