Spain Resists ECB Bailout Despite Draghi’s Urgings
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Spain’s Economy Minister Luis de Guindos has insisted that his nation “doesn’t need a bailout” despite calls from European Central Bank President Mario Draghi to take up a bond purchase plan.
Speaking during a lecture at the London School of Economics on Thursday, de Guindos said that the Spanish government was already carrying out the policies that the ECB would demand in return for buying its bonds; while expressing confidence that the country could attract enough investors on its own to take up the nation’s debt.
Spain’s Economy Minister Luis de Guindos has insisted that his nation “doesn’t need a bailout” despite calls from European Central Bank President Mario Draghi to take up a bond purchase plan.
Speaking during a lecture at the London School of Economics on Thursday, de Guindos said that the Spanish government was already carrying out the policies that the ECB would demand in return for buying its bonds; while expressing confidence that the country could attract enough investors on its own to take up the nation’s debt.
“There is a little bit of misunderstanding…Spain doesn’t need a bailout at all,” said de Guindos, as cited by the Wall Street Journal.
[quote]”What we are doing is what we think is the correct thing not only for Spain but for the future of the eurozone,” he added, as quoted by the BBC.[/quote]Related: Spain Mulls EFSF & ECB Bond Market Intervention
Related: Spain To Borrow $267 Billion In 2013 Amid Bank Bailout Fears
Related: Bailouts Alone Will Not Solve Europe’s Fiscal Problems: Leszek Balcerowicz
At its last policy meeting on September 6, the ECB had promised to buy unlimited amounts of government bonds to help lower borrowing costs for countries such as Spain or Italy. But in order to get help from the ECB, a country must first voluntarily ask for assistance by approaching the bloc’s emergency fund, the European Stability Mechanism, and agree to tight spending and reform measures.
Draghi told a news conference in Brdo Pri Kranju, Slovenia, on Thursday that it was now up to Spain to decide whether they wanted help at all.
[quote]“We are ready and we have a fully effective backstop mechanism in place,” Draghi said, as cited by the Financial Times. “Now it’s really in the hands of governments. As I’ve said many, many times, the ECB cannot replace the actions of governments.”[/quote]In a direct nudge towards Spain, Draghi added that while the country was making “significant progress” in addressing its problems, the ECB was willing to offer a rescue package that “need not necessarily be punitive.”
Related: ECB Defies Germany With Unlimited Bond Buying Plan
Related: Europe’s Fate Rests In The Hands Of The ECB: Mario Blejer & Eduardo Levy Yeyati
“We’re back at this game of brinkmanship between the ECB and governments again, and it’s a case of who makes some concessions first,” said Nick Matthews, a senior European economist at Nomura International Plc in London, to Bloomberg.
[quote]“The markets will continue to play a significant role here and Draghi needs them to turn up the pressure.”[/quote]
