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Europe´s bailout fund is really a company registered in Luxembourg made up by all the members of the EU. Its aim is to safeguard financial stability in Europe, providing financial help to those member states who need it. Also known as the rescue fund or emergency fund.

It was created following the guidelines approved by the Economic and Financial Council (ECOFIN) on May 9th 2010. The European Financial Stability Facility (EFSF) is authorized to use the following instruments, under the suitable conditions:

• Provide loans to countries in financial stress.
• Intervene in primary and secondary debt markets. The intervention in the secondary market will only be done under the guidance of the European central bank which recognizes the exceptional circumstances in the market, as well as all risks for its financial stability.
• Act upon the basis of a preventive program.
• financial institutions´ recapitalization by making loans to the government. To fulfill its mission, the EFSF issues bonds or other debt instruments in financial markets. It is supported by member state´s guarantees which are a total of 789 billion euros, and it is also capable to lend 440 billion euros.