EUROZONE finance ministers launched their permanent €500bn bailout fund yesterday but said Spain, the country widely expected to be first to draw on it, was taking steps to overhaul its economy and did not need a bailout for now.
Moody’s gave the European Stability Mechanism (ESM) a long-term issuer rating of Aaa last night – the same rating held by its predecessor the EFSF. It gave a negative outlook – like all the ESM’s Aaa-rated members bar Finland.
Arriving at a meeting in Luxembourg also set to discuss Greece and differences over how to recapitalise Europe’s wobbly banks, German finance minister Wolfgang Schaeuble said Madrid had made it clear it wanted no assistance.
“Spain needs no aid programme. Spain is doing everything necessary, in fiscal policy, in structural reforms,” he said as he arrived for a gathering that will also discuss plans to establish a single supervisor for Eurozone banks.
Luxembourg finance minister Luc Frieden took the same line but added that if Spain were to make a request for aid beyond the €100bn already earmarked to recapitalise its banks, it would be examined.
As well as Spain’s broad financial needs, yesterday’s meeting was expected to discuss the budget goals presented by Madrid last month, which the EC has yet to endorse.
But one of the trickiest issues — when the ESM rescue mechanism should be allowed to directly recapitalise banks and how it would work in practice — looked set to be left aside. At a summit on 29 June, EU leaders agreed that the ESM should be permitted to pump capital into banks directly once a single supervisory mechanism under the ECB is in place, possibly as early as January next year.