European Investment Bank (E.I.B.)

Updated: Aug 20, 2021

A bank established in 1958 by the European Economic Community whose board of governors is made up of the ministers of finance of the Community. It is a non­profitmaking institution whose function is to make loans and give guarantees with respect to (a) projects in the underdeveloped areas of the Community and associated countries, (b) projects of modernization, conversion or development that are regarded as necessary for the establishment of the Common Market and (c) projects in which member countries of the Community have a common interest. The loans, which are generally not more than 50 per cent of the capital cost of the project, are for terms from seven to twelve years and are made in a mix of foreign currencies. They have to be repaid in the currencies in which they were granted. Under the E.I.B.’s charter, loans and outstanding guarantees cannot exceed two-and-a­half times its subscribed capital. The latter was raised to 14-4 billion E.C.U.s in 1981. About 85 per cent of the E.I.B.’s funds have been for projects within the E.E.C. and the rest for developing countries overseas.

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Reference: The Penguin Dictionary of Economics, 3rd edt.

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James Knight
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James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.