BRUSSELS, Aug 4 (KUNA) -- The EU Council of Ministers Tuesday approved a regulation amending the European Financial Stabilisation Mechanism (EFSM) in order to protect non-euro area member states from any risk arising from financial assistance given to a euro area country.
The EFSM recently agreed to grant 7.16 billion euros in short term financial assistance to Greece under the EFSM.
A Council statement noted that the amendment to the rules ensures that financial assistance from the EFSM to a euro area member state will only be granted if legally binding provisions are in place.
This provision guarantees that non-euro area member states are immediately and fully compensated for any liability they may incur as a result of a failure by the beneficiary to repay the financial assistance in accordance with its terms.
The EFSM provides financial assistance to the 28 EU member states in financial difficulties. It relies on funds raised by the European Commission on the financial markets under an EU budget guarantee.
The Eurozone has created its own permanent fund called the European Stability Mechanism that provides financial assistance only to its 19 members in case of financial problems. (end) nk.ajs