At the initiative of Commissioners Marcelino Oreja and Yves-Thibault de Silguy, the Commission has approved a proposal for a Council Decision setting up a European Guarantee Fund to promote cinema and television production. The proposed Decision comes in response to a call made by the Council (Cultural/Audiovisual Affairs), on 3-4 April 1995, asking the Commission to examine the possibility of setting up a financial instrument to mobilize investment in the European programme industry. The Fund's resources will amount to ECU 200 million, enabling it to support schemes worth a total of ECU 1 billion. The instrument represents a considerable advance for the new European audiovisual policy launched by Commissioner OREJA at the beginning of the year. The instrument will provide support for all stages of audiovisual projects. Support for the industry will also be demonstrated by the creation of an effective legal framework through the proposed revision of the "Television without Frontiers" Directive, and the approval of the Media II programme which will function in complement to the financial instrument. Specially targeted at European cinema and television production companies, the proposed Fund will act as an insurer, offering banks and other financial institutions partial guarantees on loans and credit they make available to film and programme makers. By diversifying and spreading the risks, it will encourage the financial sector to step up the scale of its activities in support of the industry. It will closely complement the MEDIA programme, whose main purpose is to promote pre-production and distribution activities through subsidies or advances on earnings. The Fund will focus primarily on the production of films for cinema and television. It is intended exclusively for works of fiction, since this is where Europe faces the biggest deficit in terms of original works with wide audience potential. To obtain assistance, projects will have to have major European and international market potential. The Fund's task will be to stimulate production for international audiences to enable the industry to exploit to the full the opportunities offered by the single European market and markets outside the Community. The new Fund will operate by the rules of the market. It will be paid premiums for the risks it covers, so avoiding any distortion of competition. Those benefiting will be European production companies and distribution companies contributing to production in various ways. However, the Fund will not operate in direct contact with them, but will work through banks and insurance companies which propose to share the risks associated with financial operations in this area. This means that although the Fund's leverage will be able to mobilize substantial financial resources for cinema and television production, it will not finance it directly. The Fund s implementation will draw on methods and practices already developed at Community level. It is proposed to place it under the management structures of the European Investment Fund (EIF). The EIF, which also operates as a guarantee fund, was set up last year by the European Investment Bank (EIB), the Commission and financial institutions (76 so far). The EIF's authorities, in accordance with its Statutes, have indicated their willingness to administer the resources of the proposed Guarantee Fund. The precise arrangements for administering the new Fund will be laid down in a cooperation agreement between the Commission and the European Investment Fund. To enhance the impact of its operations, the Guarantee Fund will seek to share the risks with the EIF by concluding joint guarantee agreements. It could also make agreements with other institutions that share the same objectives (such as national funds to support the film-making industry). Under the scheme, the EIF will be responsible for administering a clearly defined volume of resources comprising contributions from the Commission and the financial sector, both public and private. These funds will serve as guarantee capital and should eventually reach a total of ECU 200 million, the Union's contribution being ECU 90 million. Together with possible joint guarantees provided by the EIF, the total volume of guarantees generated in favour of cinema and television production could reach ECU 1 billion.