Spanish Prime Minister, Mariano Rajoy, called for a show of force from European authorities as his government sought ways to avoid tapping markets to fund the bailout of the nation's third-biggest lender.
“Europe has to dissipate any doubts about the euro”, he said. "It must affirm that the euro is an irreversible project and act in consequence.” Rajoy repeated that he wouldn’t seek a European rescue for the nation’s banks. Still, he said the European Stability Mechanism, which is due to start operating as a permanent rescue fund in July, should be able to recapitalise struggling banks directly, bypassing national governments.
ECB Executive Board member, José Manuel Gonzalez-Paramo, said that the government should talk less about what the central bank should do. The ECB has already shown “largesse” to Spain, which was the main beneficiary of its decision to offer €1 trillion of three-year loans to banks in December and February, Gonzalez-Paramo said.
Rajoy said the government hadn’t spoken to the ECB on the matter and the central bank declined to comment on the proposal, which was confirmed by an Economy Ministry spokesman yesterday. The premier said the government hadn’t yet decided how it would recapitalise Bankia.
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