Brussels, 27/07/2012 (Agence Europe) - The German chancellor, Angela Merkel, and the French president, François Hollande, say the 28-29 June 2012 European Summit decisions have to be rapidly implemented and issued a joint press release to this effect on Friday 27 July after discussing the matter over the telephone. France and Germany say they are determined to do all its takes to protect the integrity of the eurozone.
At the end of last month, a eurozone summit discussed the use of the bailout funds, the current European Financial Stability Fund (EFSF) and/or the new European Stability Mechanism (ESM) to help countries like Spain that are making the necessary cuts and structural reforms, as recommended, and yet are still under attack from the money markets (see EUROPE 10645). Despite its restricted lending capacity of some €200 billion, the EFSF would be able to buy up bonds on the primary and secondary markets, in exchange for which Madrid would have to sign a Memorandum of Understanding laying down certain preconditions for the aid, such as respect of the Stability and Growth Pact (budget cuts and reducing macroeconomic imbalances) and the European Summit's structural reform recommendations set out under the European Semester system.
After winning aid of up to €100 bn to bail out its banks, which are suffering from the collapse of the property bubble, the Spanish government does not want any financial aid accompanied by controls and conditions laid down by international lenders. The Spanish deputy prime minister, Soraya Sáenz de Santamaría, said on Friday that the question of a bailout was simply not an option. The Commission states that no countries have officially requested new activation of the eurozone bailout funds. French newspaper Le Monde, however, reports that talks are currently under way about the purchase of Spanish bonds by the EFSF or ESM in September. Talks are also underway about giving the ESM a banking licence, wihch would give it much greater lending capacity than its current €500 bn (MB/transl.fl)