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Spain, already drawing on 100 billion euros ($130 billion) to repair its banking system, wants the lightest possible conditions on a European credit line or loan program that would also enable the European Central Bank to buy bonds to bring down its borrowing costs.
“If there will be support, there will be conditions,” Dutch Finance Minister Jan Kees de Jager told reporters before a meeting of euro-area finance chiefs in Nicosia, Cyprus today. “Spain is on the right way but they have to continue to convince the markets that they have a sound policy.”
Spain’s aid-or-no-aid dilemma comes with the euro at a four-month high and Spanish bond yields at five-month lows. As at prior stages in the almost three-year debt turmoil, political leaders run the risk of being lulled into a false sense of security that dilutes efforts to fix the economy.
“Europe is stabilized,” Austrian Finance Minister Maria Fekter said. “We’ll be equipped to deal with all phenomena that come along.”
Bond-Buying Mission
The euro rose as much as 0.5 percent $1.3054 today, the highest since May 8. Spanish 10-year bond yields fell 5 basis points to 5.58 percent, the lowest since April 3. The extra yield over German bonds narrowed by 12 basis points to 396 basis points. ... Continue to read.
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