Capital injection dire need for Eurozone
US President Barack Obama has urged European leaders to inject
capital into weak banks. He asked them to act quickly to resolve the
region's financial problems.Obama held a news conference at the White House on Friday. He said
European leaders must make difficult decisions but there are solutions
available.
Referring to the US government's capital injections into banks in the wake of the 2008 financial crisis, Obama said eurozone nations need to make similar efforts to restore public and market trust.Obama said that a recession in Europe could push down US exports. He said he would take measures to strengthen the US economy against shocks from Europe.Obama again called for the opposition Republican Party to back economic stimulus measures, including legislation supporting small and medium-sized companies.
European Commission spokesman said Friday that the euro area has instruments "ready to use" if Spain asks for help for its banks, but refused to confirm rumours about a weekend conference to discuss the issue.
"If such a request were to be made, the instruments are there, ready to be used, in agreement with the guidelines agreed in the past, in 2011. We are not at that point," said Amadeu Altafaj.
In response to questions about earlier media reports of a weekend conference call among Eurogroup finance ministers to discuss a bailout of Spain's struggling banks, Altafaj said, "I cannot confirm it."
Some media quoted EU officials earlier on Friday as saying that Spain was likely to ask for loans from the European Financial Stability Facility (EFSF) to recapitalize its banks on Saturday, when eurozone finance ministers are to hold a conference call.
"We have no news of any request from Spain for financial assistance, therefore no ground to speculate," he added.
The spokesman suggested that the eurozone would work together with Spain to rescue the failing banks after the Spanish authorities provide "a clear and robust assessment of the situation of the banking sector" and a request is presented.
He said, however, that action is obviously needed to address the "fragilities" of the Spanish banking system and this could entail "elements of recapitalization of some entities."
Altafaj also said Spain is not alone in facing problems in its banking system and "several member states are still addressing these fragilities."
Spanish Deputy Prime Minister Soraya Saenz de Santamaria on Friday said no decision had been taken regarding applying to international lenders for any possible bailout.
Saenz de Santamaria stated no decision would be taken until results from external audits and the International Monetary Fund reveal how much money would be needed to recapitalize Spain's banking system.
However, she did not rule out the possibility of asking European institutions for help, but insisted "procedures must be respected."
Saenz de Santamaria was responding to questions about rumors circulating on Friday that Spain would ask for a bailout on Saturday afternoon.
Amadeu Altafaj, spokesperson for the European Commissioner for economic and monetary affairs, reiterated that the Spanish government has not formally asked for help.
On Friday, the Spanish government announced a third round of financial reforms to restructure the country's banks.
Spanish Minister of Economy and Competitiveness Luis de Guindos said the Bank of Spain will be in charge of analyzing the results provided by the audits. Spain would then take necessary measures.
Initial results will be announced on June 21 and the final figures on July 31.
Referring to the US government's capital injections into banks in the wake of the 2008 financial crisis, Obama said eurozone nations need to make similar efforts to restore public and market trust.Obama said that a recession in Europe could push down US exports. He said he would take measures to strengthen the US economy against shocks from Europe.Obama again called for the opposition Republican Party to back economic stimulus measures, including legislation supporting small and medium-sized companies.
European Commission spokesman said Friday that the euro area has instruments "ready to use" if Spain asks for help for its banks, but refused to confirm rumours about a weekend conference to discuss the issue.
"If such a request were to be made, the instruments are there, ready to be used, in agreement with the guidelines agreed in the past, in 2011. We are not at that point," said Amadeu Altafaj.
In response to questions about earlier media reports of a weekend conference call among Eurogroup finance ministers to discuss a bailout of Spain's struggling banks, Altafaj said, "I cannot confirm it."
Some media quoted EU officials earlier on Friday as saying that Spain was likely to ask for loans from the European Financial Stability Facility (EFSF) to recapitalize its banks on Saturday, when eurozone finance ministers are to hold a conference call.
"We have no news of any request from Spain for financial assistance, therefore no ground to speculate," he added.
The spokesman suggested that the eurozone would work together with Spain to rescue the failing banks after the Spanish authorities provide "a clear and robust assessment of the situation of the banking sector" and a request is presented.
He said, however, that action is obviously needed to address the "fragilities" of the Spanish banking system and this could entail "elements of recapitalization of some entities."
Altafaj also said Spain is not alone in facing problems in its banking system and "several member states are still addressing these fragilities."
Spanish Deputy Prime Minister Soraya Saenz de Santamaria on Friday said no decision had been taken regarding applying to international lenders for any possible bailout.
Saenz de Santamaria stated no decision would be taken until results from external audits and the International Monetary Fund reveal how much money would be needed to recapitalize Spain's banking system.
However, she did not rule out the possibility of asking European institutions for help, but insisted "procedures must be respected."
Saenz de Santamaria was responding to questions about rumors circulating on Friday that Spain would ask for a bailout on Saturday afternoon.
Amadeu Altafaj, spokesperson for the European Commissioner for economic and monetary affairs, reiterated that the Spanish government has not formally asked for help.
On Friday, the Spanish government announced a third round of financial reforms to restructure the country's banks.
Spanish Minister of Economy and Competitiveness Luis de Guindos said the Bank of Spain will be in charge of analyzing the results provided by the audits. Spain would then take necessary measures.
Initial results will be announced on June 21 and the final figures on July 31.
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