BERLIN — The German and Italian leaders issued a new pledge to protect the eurozone, while the influential eurogroup chairman was quoted Sunday as saying that officials have no time to lose and will decide in the coming days what measures to take.
The weekend comments capped a string of assurances from European leaders that they will do everything they can to save the 17-nation euro. They came before markets open for a week in which close attention will be focused on Thursday’s monthly meeting of the European Central Bank’s policy-setting governing council.
German Chancellor Angela Merkel and Italian Premier Mario Monti “agreed that Germany and Italy will do everything to protect the eurozone” in a phone conversation Saturday, German government spokesman Georg Streiter said, a statement that was echoed by Monti’s office.
Though they didn’t pledge any specific action, the comments raised expectations that the ECB might step in to buy Spanish and perhaps Italian government bonds to lower the countries’ borrowing costs, which have been worryingly high in recent weeks. Another possibility might be for the eurozone’s temporary rescue fund, the European Financial Stability Facility, to buy bonds.
“What measures we will take, we will decide in the coming days,” Jean-Claude Juncker, the Luxembourg prime minister who also chairs meetings of the eurozone finance ministers, or eurogroup, was quoted as telling the German daily Sueddeutsche Zeitung. “We no longer have any time to lose.”
Italy and Spain have the eurozone’s third- and fourth-largest economies, respectively, behind Germany and France.
Those included allowing Europe’s bailout fund — once a new, independent bank supervisor is set up — to give money directly to a country’s banks, rather than via the government. Countries that pledge to implement reforms demanded by the EU’s executive Commission also would be able to tap rescue funds without having to go through the kind of tough austerity measures demanded of Greece, Portugal and Ireland, which have had to get international bailout packages.
“I have no doubt that we will implement the decisions of the last summit,” Juncker was quoted as saying. “It still has to be decided what exactly we will do when. That depends on the developments of the coming days and how fast we have to react.”
“When I say ‘we,’ I mean the EFSF rescue fund — that means the 17 euro countries,” Juncker was quoted as saying. He added that they would coordinate closely with the ECB — “and we will, as Draghi says, see results.”
“I don’t want to raise expectations,” he said. “But I must say that we have arrived at a decisive point … the euro countries have arrived a point where we must make extremely clear with all available means that we are determined to ensure the financial stability of the currency union.”
Merkel’s finance minister, Wolfgang Schaeuble, earlier dismissed talk that Spain might make an application to the EFSF to buy its bonds. He told the Welt am Sonntag newspaper that “there is nothing to this speculation.”
The latest assurances come as concern flares again about Greece. International debt inspectors are scrutinizing Greece’s finances and its progress in implementing unpopular budget cuts and reforms demanded in exchange for the rescue loan program that is keeping the country afloat.
Greek officials have called for more time to implement the measures, but patience among creditors is running short. If the inspectors’ report, expected in September, is damning, Athens could stop receiving loans and face bankruptcy and an exit from the 17-nation euro.
“The aid program is already very accommodating. I cannot see that there is still scope for further concessions,” Schaeuble said.