The European Fund for Strategic Investment is initially being endowed with €21bn of capital for targeted, catalytic risk bearing capacity.
Seed capital is being provided by the EU and European Investment Bank (EIB) and will aim to unlock over €300bn of investment over the next three years.
"This money will allow us to become involved in riskier, but potentially highly beneficial ventures. As a result, high added value projects will attract private investment. The pipeline of projects for the fund will build upon work done by a task force of member states under the chairmanship of the EC and the EIB," Werner Hoyer, EIB President said.
Overall the fund will serve as credit protection for a range of new activities to be carried out by the EIB.
These will include long-term debt financing for higher-risk projects, subordinated loans and a variety of equity financing. The aim will be to target projects in sectors such as transport, energy and the digital economy.
Much of the investments will be funnelled towards Europe’s crisis-ravaged south.
Speaking to the EU Commission at the launch of the fund, Jean-Claude Juncker, Commission President, said: "Europe needs a kickstart and today the Commission is applying the jump leads."