France Says Aiding Spain Might Mean Fund Boost, ECB Action
French Foreign Minister Laurent Fabius said on Tuesday that he hoped that Spain would not need a full bailout, but if so, it could require a boost to Europe's rescue fund or European Central Bank action.
"I hope it will not be necessary to intervene again," Fabius told France 2 television. "If we have to intervene, it could be (via) an increase of firewalls... or interventions by the (European) central bank."
Eurozone leaders have already approved exceptional loans of up to 100 billion euros ($121 billion) for Spanish banks that have been destabilized by huge losses on risky property loans.
Meanwhile, EU rescue funds such as the future 500-billion-euro ($605-billion) European Stability Mechanism are designed to act as "firewalls" to protect Eurozone countries with loans and fend off debt contagion.
For Spain, as for other European Union members, "we must simultaneously be serious in terms of the budget and (ensure) that there is a growth dimension" to the EU's efforts, Fabius said.
The French government has stressed promoting growth as a way of pulling the Eurozone out of crisis, while Germany has put the focus on budget discipline, creating a rift that both sides now seek to heal.
Spain has denied that it needs a full international bailout, but its economy is in recession and its long-term borrowing costs have jumped to dangerously high levels, sowing panic on world markets.
Source: Agence France Presse
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