The future of the euro is in play, says Spanish Finance Minister

Date: Friday 01 Jun 2012

Spanish Finance Minister Luis de Guindos has called for a mechanism to inject capital into European banks to be created, as he warned that the very future of the single currency is at risk in the current crisis.

“I don’t know if we’re on the edge of the precipice, but we’re in a very, very, very difficult situation,” he said at the annual meeting of the Cercle D’Economia in Sitges, Spain yesterday. “The future of the euro will be played out in the next few weeks in both Spain and Italy”, he asserted.

While De Guindos admitted that his country needs to act correctly to bring down its credit spread, he also insisted that Europe as a whole needed to take action to restore confidence. “I’m aware of the worry and distress but if that is to change it will require clearing up the uncertainty surrounding the euro (…) A very clear message on the euro is needed and I believe it will come after the Greek elections,” he said.

He also pointed out that the single currency was important for Germany - both its exports and its financial system - and suggested that it needed to make decisions.

Referring to European Central Bank President Mario Draghi's call for a “banking union”, De Guindos suggested that a “mechanism for injecting capital into banks” needed to be created and said that “we will see steps in that direction in the following weeks”.

Also in response to Draghi who said that Spain handled the €19bn bailout of Bankia in the worst way possible, De Guindos asserted that “not having rescued Bankia would have been an act of folly creating a domino effect”.

JM

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