Brussels, 30/07/2012 (Agence Europe) - The head of Eurogroup, Jean-Claude Juncker, has made it clear that the European Central Bank and the eurozone will be acting together to aid eurozone nations like Spain and Italy, which are making big spending cuts and macroeconomic reforms but are still coming under attack from the money markets. Juncker said that this was a crucial point and the speed of future changes needs to be determined. He said the eurozone would act together with the ECB but the bank would keep its independence. When I say the eurozone, I mean the bailout fund, the EFSF (European Financial Stability Fund), in other words the 17 governments of the eurozone, he added, certain that his cooperation would deliver.
The EFSF is buying up Spanish bonds on the primary market, reportedly with the approval of the French, German and Italian leaders. After four months' absence, the ECB is reported to be intervening again on the secondary market (despite strong opposition from the Bundesbank).
Any aid from the EFSF requires a formal request from the country in question, which must then introduce an austerity programme. The director of the Spanish treasury, Iñigo Fernandez de Mesa, said on Monday in Spanish newspaper Expansion that Spain was not planning to ask the EFSF for a bailout, and this was repeated by German Finance Minister Wolfgang Schäuble at the weekend in an interview with Welt am Sonntag. It remains to be seen whether the president of the ECB, Mario Draghi, will announce special measures on Thursday 2 August after the meeting of the ECB Governing Council. Draghi has asked the eurozone countries to do their duty to shore up the single currency's stability. On Thursday, Madrid will be issuing ten-year bonds - a test of its ability to attract investment. (MB/transl.fl)