European Council 30 May 2012 Keyword Glossary

(see alphabetical index on page 4)

Term

Definition Privatedebtissuedbythesponsor(s)ofaproject,eitheraprivatecompanyora specialpurposevehicle(SPV)createdbyoneormorecompaniestofinancea specificproject. TheEUProjectBondInitiative[or:theEUprojectbondinstrument]willprovide creditenhancementforprojectsinordertomakeiteasierfortheirsponsorsto attractprivatefinancing.TheCouncilandtheEuropeanParliamentreachedan agreementon22May2012toinitiateapilotphaseonEuropeanprojectbonds in201213(pressrelease@http://tiny.cc/pilotprojectbonds). Whenraisingfinancingthroughaprojectbond,thecompanyorSPVwillissue seniorandsubordinatedtranchesofdebt.Bycreatingasubordinatedtranche, whichwilltakefirstlosses,thecreditstandingoftheseniordebtwillbe enhancedbecauseitwillcarrylessrisk.Thiswillattractmoreinvestors.TheEIB andtheEUwillsharetherisksinvolved.FortheEU,thiswilltaketheformofan upfrontcappedcontributionfromtheEUbudgettocoveritsagreedshareof thepotentiallossesontheprojectssupported.Theresiduallosswillbeborne bytheEIB. Examples: projectsonthecorenetworkinthefieldoftransport,infrastructure prioritycorridorsandareasinthefieldofenergy,etc.Fulllistoftheprojects@ http://tiny.cc/COM2011_665(pp3855). Nottobeconfusedwithprojectbonds(seeabove). SovereignissuanceintheeuroareaiscurrentlyconductedbyMemberStates onadecentralisedbasis,issuingeurodenomiantedbondsusingvarious nationalprocedures.Theintroductionofcommonlyissuedeurobondswould meanapoolingofsovereignissuanceamongtheMemberStatesandthe sharingofassociatedrevenueflowsanddebtservicingcosts,aswellas obligationtopaybackthedebt. TheCommissionissuedagreenpaperonthesubjectinNovember2011.The resultsoftheconsultation(concluded8Jan.2012)canbeseen@ http://tiny.cc/eurobonds_consult. Alsocalledstabilitybondsoreurosecurities.

ProjectBonds

Eurobonds

Term

Definition Abankwhoseroleistoprovidelongtermfinanceinsupportofinvestment projects.TheEIB'sshareholdersarethe27MemberStatesoftheEU,which havejointlysubscribeditscapital.Itsboardofgovernorsiscomposedofthe memberstates'financeministers. TheEIBisthelargestinternationalnonsovereignlenderandborrower,raising theresourcesitneedstofinanceitslendingactivitiesbyborrowingoncapital markets,mainlythroughpublicbondissues. In2011,EIBfundingamountedtoEUR61billion.Roughly90%ofthiswentto projectswithintheEU,supportingabroadrangeofpolicyobjectives,including cohesionpolicyindisadvantagedregionsandinvestmentsbySMEs.Outsidethe EU,theEIBisactiveinover150countries.Moreinformation@www.eib.org. Ajointinitiative(startedin2007)oftheEuropeanCommissionandthe EuropeanInvestmentBanktosupporthigherriskandrewardinvestmentin research,developmentandinnovation(theRDIprojects). TheEUR10bnthatisavailableundertheRSFFwillbefinancedbyEIBby leveraginguptoEUR2bnofcapitalofwhichEUR1bnisfromtheCommunity SeventhFrameworkProgrammeandEUR1bnfromEIBsownresourcesthat coverstherisksincurredrelatedtohigherriskfinancing. Moreinformation@http://tiny.cc/RSFF&http://tiny.cc/RSFFyou(video). LoanGuaranteeInstrumentforTransEuropeanTransportNetworkProjectsis aninnovativefinancialinstrumentsetup(in2008)anddevelopedjointlybythe EuropeanCommissionandtheEuropeanInvestmentBank(EIB)whichaimsat facilitatingalargerparticipationoftheprivatesectorinvolvementinthe financingofTransEuropeanTransportNetworkinfrastructure(TENT). Moreinformation@http://tiny.cc/LGTT. ThestructuralfundsarekeyinstrumentsinthefinancingoftheEU'scohesion policy. TheEUbudgetfor2012includespaymentsofaroundEUR43.7bnfor theEuropeanRegionalDevelopmentFund,theEuropeanSocialFundandthe CohesionFund. Cohesionpolicyisaimedatreducingdisparitiesbetweenthelevelsof developmentoftheEU'svariousregions,notablyasregardsitsleastdeveloped regions.Particularattentionispaidtoruralareas,areasaffectedbyindustrial transition,andregionsthatsufferfromnaturalordemographichandicaps. Managementofthestructuralfundsissharedbythememberstatesandthe Commission.

European InvestmentBank (EIB)

RiskSharing FinanceFacility (RSFF)

LoanGuarantee forTransport

StructuralFunds

Term

Definition FTTisataxleviedontransactionsoffinancialinstruments(e.g.shares,bonds, derivatives). AproposalforanEUwideFTTproposingtotaxawidebaseoffinancial transactionswasmadebytheCommissioninSeptember2011andisbeing intensivelydiscussedbytheCouncil.TheCommissionestimatesthat, dependingonmarketreaction,yearlyrevenuescouldamounttoEUR57billion onthebasisofitsproposal. Variationsofsuchataxcoveringnarrowerbaseoffinancialtransactionsexistin anumberofMemberStates(e.g.stampduty,etc.)andoutsideoftheEU(e.g. Singapore,Switzerland,etc.). AframeworklayingdownthemaximumannualamountswhichtheEuropean Unionmayspendindifferentpolicyfieldsoverafixedperiodofnotlessthan5 years. ThepurposeoftheMFFisto translatepoliticalprioritiesintofigures; imposebudgetarydisciplineontheEU;and facilitatetheadoptionoftheannualEUbudget. ThefutureMFFwillcoverthe20142020periodandiscurrentlyunder negotiation. Asixmonthperiodeachyearwhenmemberstates'budgetary,macro economicandstructuralpoliciesarecoordinatedsoastoallowmemberstates totakeEUconsiderationsintoaccountatanearlystageoftheirnational budgetaryprocessesandinotheraspectsoftheireconomicpolicymaking. TheEuropeanSemesterof2012hasalreadyenteredthesecondphase,during whichthememberstateshavetocompletetheirnationalreformprogrammes andstabilityandconvergenceprogrammes.TheEuropeanCommission evaluatedthesedocumentsandadoptedon30Maycountryspecific recommendations.Seehttp://tiny.cc/recommendations2012.Afteradiscussion bytheCouncilandtheEuropeanCouncilinJune,thesewillformallybeadopted inJuly.Moreinformation:http://www.consilium.europa.eu/policies/european semester. Apackageofpolicyandlegislativemeasuresforreinvigoratingandcompleting theinternalmarketinviewofachievingahighlycompetitivesocialmarket economyintheEU. Itseekstostrengthencitizens'andbusinesses'confidenceintheirinternal marketandtoensurethatitsbenefitsarepassedontoconsumers. ItincludesgoalssuchasthedevelopmentofmoderntransEuropeanenergy, transportandtelecominfrastructure,expansionofdigitalcontentmarkets, creationofunitarypatentprotection,facilitatethemobilityofworkers,etc.

Financial TransactionTax (FTT)

Multiannual Financial Framework (MFF)

European Semester

SingleMarket Act

Term

Definition EURES(EuropeanEmploymentServices)isacooperationnetworkformedby publicemploymentservices.Tradeunionsandemployersorganisationsalso participateaspartners. TheobjectiveoftheEURESnetworkistofacilitatethefreemovementof workerswithintheEuropeanEconomicArea(EEA)(the27membersofthe EuropeanUnion,plusNorway,LiechtensteinandIceland)andSwitzerland,by providinginformation,adviceandrecruitment/placement(jobmatching) services. TheEURESportaloffersjobvacanciesin31Europeancountries,CVsfrom interestedcandidates,informationaboutlivingandworkingabroadandmuch more.Checkitoutatwww.ec.europa.eu/eures.

EURESPortal

Index EURESPortal, 4 Eurobonds, 1 EuropeanInvestmentBank(EIB), 2 EuropeanSemester, 3 FinancialTransactionTax(FTT), 3 LoanGuaranteeforTransport, 2 MultiannualFinancialFramework(MFF), 3 ProjectBonds, 1 RiskSharingFinanceFacility(RSFF), 2 SingleMarketAct, 3 StructuralFunds, 2