European Investment Bank


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European Investment Bank,

nonprofit bank created in 1958 by the six founding countries of the European Economic Community (now part of the European UnionEuropean Union
(EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community (EC), an economic and political confederation of European nations, and other organizations (with the same member nations)
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 [EU]). The bank makes or guarantees loans to EU members, principally for projects that will contribute to regional development within the union. Some loans are also made to nonmembers, including countries of the Mediterranean region and central and E Europe and, under the Lomé Convention and Cotonou Agreement, developing countries in Africa, the Caribbean, and the Pacific.

European Investment Bank

 

the investment bank of the six member countries of the Common Market (France, the Federal Republic of Germany, Italy, Belgium, the Netherlands, and Luxembourg). It was established in 1958 in conjunction with the Treaty of Rome (1957), which created the Common Market. The bank is headed by a council of directors, consisting of the finance ministers of the member countries. The bank’s headquarters is located in Brussels. Authorized and issued share capital is $1 billion; paid-in capital amounts to $250 million (including 25 percent in gold and 75 percent in national currencies), and the remaining $750 million serves as a fund guaranteeing loans granted by the bank. Since May 1971 authorized capital has been increased to $1.5 billion, and paid-in capital to $300 million.

France and West Germany have each subscribed for $450 million, Italy for $360 million, Belgium for $130 million, the Netherlands for $107 million, and Luxembourg for $3 million. The bank issues bonds. By early 1971, bonds totaling $1,020 million were issued, of which two-thirds were distributed in countries of the Common Market and one-third in the USA. The bank grants loans at a 7.5 percent annual interest rate to state and private enterprises of the Six, as well as to Greece and to the African states that are members of Eurafrica. The bank received the right to invest in the African states as of 1963. Credits granted by the bank as of Jan. 1, 1971, totaled $1,393 million. Moreover, the bank participated in investment projects totaling $4.5 billion. Credits issued amounted to $1,060 million. Of the credits granted, 91 percent are for the Six (Italy, 57 percent; France, 19 percent; West Germany, 9 percent; and Benelux, 6 percent), 5 percent are for Greece, and only 4 percent for developing countries, mostly African. The majority of credits are awarded for the creation and improvement of infrastructures (construction of railroads, highways, wharves, and communications enterprises) and for the development of agriculture.

M. LU. BORTNIK

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