30SECOND GUIDE TO ... THE EFSM

What’s that?

The European Financial Stability Mechanism is an emergency funding programme involving all 28 members of the EU, including Britain. The fund can raise up to £42bn to rescue EU members.

So what about it?

Greece. That’s what. The European Commission wants to use the fund to provide bridging loans of up to £6.1bn to Athens so it can meet upcoming payments to the European Central Bank and International Monetary Fund. In Brussels on Tuesday, Chancellor George Osborne said the suggestion was ‘a complete non-starter’.

Why?

The UK government is opposed to non-eurozone countries such as Britain bailing out struggling countries in the single currency bloc. Using the fund – of which the UK pays around 14pc – would put around £850m of UK taxpayers’ money on the line. Osborne said the eurozone needs to foot its own bill.

In 2010, David Cameron said he had won an agreement that the EFSM would no longer be used to bail out eurozone nations.

Are there other funds?

Yes. The European Financial Stability Facility was created as a temporary bailout fund in 2010 – and involved only countries in the eurozone. And the European Stability Mechanism is meant to provide financial assistance to eurozone members.