This is Paul Adamson and I'm in conversation with Yerki Katainen.

Yerki Katainen is a vice president at the European Commission responsible for jobs, growth, investment and competitiveness.

He was also Prime Minister of Finland from 2011 to 2014.

Yerki, one of your key tasks in the European Commission is to oversee this new European Fund for Strategic Investment.

Can you tell me where the idea of the fund came from from the first place?

And what is its purpose?

Well, actually, the idea came from private sector.

It said that there's plenty of liquidity in the European market and

they say that the only thing which is missing is risk financing. Banking regulation

has changed and in some countries banks are forced to de-leverage so they cannot lend

more if there is not a risk financing facility.

So, as I said, the initiative came from private sector

and now we have established the European Fund for Strategic Investment

which offers risk financing first loss guarantees,

mostly to private investors.

There are two strands to which EFSI will invest in.

First is SME sector, venture capital equity type of financing, but also infrastructure.

Okay, and can you explain to me that kind of strange alchemy where you take 15 billion euros from the European Union budget,

or 16 billion, you add 5 billion from the European Investment Bank, and hey Bresto, you come out with a final figure 300 billion.

How does that work, please?

It works like normal banking is working, so it's a question of leveraging.

This 21 billion guarantee fund will enable the European Investment Bank

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