When Greece lost access to the financial markets in early spring 2010, there was a risk of contagion to other fragile economies. In the light of this possibility, the Council and the Member States agreed on a series of measures to preserve financial stability in Europe, including a European Financial Stabilisation Mechanism with a total volume of up to EUR 500 billion. This mechanism provided for the establishment of an ad hoc entity (the European Financial Stability Facility) to raise capital on the markets, with a lending capacity of up to EUR 440 billion. The additional EUR 60 billion is covered by the EU budget for the years 2011 to 2013.

On 7 June 2010, the Eurogroup approves the establishment of the European Financial Stability Facility as a public limited liability company (société anonyme) in Luxembourg, governed by the laws of that country. The statutes are published in the Official Journal of the Grand Duchy of Luxembourg (the Memorial) on 8 June 2010.