On 21 July, eurozone leaders agreed to increase the efficiency of the EFSF. Originally, financial assistance was meant to be provided only in the form of bilateral loans to individual member states facing difficulties in accessing financial markets
Now, the EFSF will be able to:
- Intervene in primary markets - purchase of newly issued member state bonds.
- Intervene in secondary markets - purchase existing member state bonds.
- Grant the use of a precautionary instrument, activated only if necessary - either through an EFSF loan or EFSF interventions in primary markets.
- Recapitalise financial institutions - help to member states after they have exhausted all other possible resources.
On 26 October, two options were examined by eurozone leaders for increasing the impact of the EFSF without extending the guarantees provided by member states.
- Option 1: Credit enhancement of sovereign primary issuance
- Option 2: Generator of new funding sources.