European Finance Ministers agreed yesterday in their meeting in Brussels, ahead of the awaited Summit later on this week, on terms to increase the lending capacity of the new anti debt crisis mechanism known as the European Stability Mechanism (ESM) which will be active from June 2013.
Following the Ministers' decision to expand the current European Financial Stability Facility (EFSF) from 250 billion euros to 440 billion euros earlier this month, they agreed to make the ESM able to lend 500 billion euros with capital base of 700 billion euros, where loans will be provided at lower interest rate than those offered by the EFSF.
The ESM is going to be financed by 80 billion euros from member states, where 40 billion euros will be available by 2013 while the rest will be paid in the following three years. On the other hand, the remaining 620 billion euros will be in the form of guarantees and easier and quicker funds than the current ones.
Finally, they agreed to make the ESM able to offer short-term and medium-term loans for debt-stripped nations as well as to buy bonds from primary markets.