Access to funds under the European Financial Stability Fund (EFSF) can be granted following an application to the EFSF for financial assistance. This assistance will be granted on the basis of a Financial Assistance Facility Agreement. Such an agreement, will be conditional upon the relevant euro-area Member States entering into a Memorandum of Understanding (MoU) with the European Commission, acting on behalf of the euro-area Member States. Any MoU entered into will be subject to conditionality, such as budgetary discipline, economic policy guidelines and their compliance with the terms of such an MoU. The EFSF has been created as a temporary institution. The EFSF Framework agreement as amended provides that "Euro-area Member States which are potential borrowers may only request and enter into Loan Facility Agreements up to 30 June 2013 (provided that loans may be disbursed after this date under Loan Facility Agreements entered into prior to this date)."
It also provides that EFSF guarantors shall only be required to issue a guarantee to facilitate the financing under Loan Facility Agreements entered into on or prior to 30 June 2013.
In accordance with its Articles of Association, the EFSF will be liquidated on the earliest date after 30 June 2013 on which there are no longer loans outstanding to a euro-area Member State and all Funding Instruments issued by EFSF and any reimbursement amounts due to Guarantors have been repaid in full.
This means that after June 2013, EFSF would not enter into any new programmes but will continue the management and repayment of any outstanding debt and will close down once all outstanding debt has been repaid.
The Eurogroup's statement of 30 March 2012, provides that the ESM will be the main instrument to finance new programmes as from July 2012. It's lending capacity will be €500 billion. The EFSF will, as a rule, only remain active in financing programmes that have started before that date. For a transitional period until mid-2013, it may engage in new programmes in order to ensure a full fresh lending capacity of EUR 500 billion for the ESM during the initial set up period.
These arrangements form part of a number of initiatives. All these initiatives were made to improve the governance of the euro area through enhancements of the Stability and Growth Pact, the new macro-economic imbalances procedure, the Euro Plus Pact and the Fiscal Compact enshrined in the new Treaty on Stability, Cooperation and Governance in the Economic and Monetary Union. Finally, robust firewalls have been established. This comprehensive strategy has paid off and led to a significant improvement of market conditions.