Spanish Prime Minister Mariano Rajoy
declared his support for eurobonds for the first time on Tuesday and
demanded that Brussels make its position on the financial instruments
clear in order to give highly indebted states more stability.
The European Union needed a banking union and a joint supervisory
committee for banks, Rajoy told the Senate, the upper house of
parliament.
The premier, who took office last year, has until now avoided
taking a clear stance on eurobonds to avoid involving itself in what
has become a dispute between France and Germany.
German Chancellor Angela Merkel has firmly ruled out eurobonds,
while freshly elected French President Francois Hollande has been
outspoken in his support for them.
Earlier in the day, Spanish Finance Minister Cristobal Montoro
denied that Spain needed a full EU bailout and rejected reports that
Germany was pressing his country to seek outside aid. But he admitted
that "at the moment, we have a problem with access to the markets."
Spain's borrowing costs have continued to soar, with interest
rates on 10-year bonds climbing to 6.7 percent last week. It was
interest rates of around 7 per cent that forced fellow eurozone
countries Ireland, Portugal and Greece to seek bailouts.
In an interview with Onda Cero radio, Montoro said "the sums that
the Spanish banking sector needs to recapitalize itself are not very
high, they are not excessive."
"The question is the procedure, where that money will come from,
and that is why it is so important for European institutions to act"
so that they can "facilitate" the task, the minister said.
A decision in this sense should be adopted at the next EU summit
on June 28-29, he added.
The banking union idea was launched last week by the European
Commission and the European Central Bank. It would require all 17
euro members to jointly underwrite bank deposits, devise common
schemes to deal with failed banks and agree on joint supervision.
A debate is ongoing on whether the banking union reform should
include a rule change for the European Stability Mechanism, the
eurozone's new bailout fund, allowing it to directly rescue banks
without first needing a formal bailout request by a government.
Meanwhile, IMF chief Christine Lagarde on Tuesday urged further
eurozone integration, telling a conference in Riga that it would
"give a very strong signal of stability" to financial markets.
In the coming years, Lagarde said, she hoped the euro "will have
expanded beyond the strict monetary currency to become much more of a
fiscal and a financial union as well as being a monetary union."
