248 lines
6.5 KiB
Plaintext
Executable File
248 lines
6.5 KiB
Plaintext
Executable File
finance
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financialcrisis
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8201223
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-----
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# ECB urges bigger rescue fund as bond investors punish Spain
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## The European Central Bank urged Europe to increase the size and scope of
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its €750bn financial rescue fund ahead of a crucial leaders' summit this week
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as bond investors demanded higher interest rates to hold Spanish debt.
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![ECB urges bigger rescue fund as bond investors punish Spain][1]
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Jean-Claude Trichet, the president of the ECB wants goverments to do more.
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1:14PM GMT 14 Dec 2010
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[Comments][2]
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"We are calling for maximum flexibility, and I would say maximum capacity,
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quantitatively and qualitatively" for the European Financial Stability
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Facility, said Jean-Claude Trichet, the president of the central bank, in
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Frankfurt.
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His comment came as a Spain raised €2.5bn via an issue of 12-month and
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18-month bonds but despite strong demand had to pay higher interest rates due
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to uncertainty over its debts.
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Spain sold nearly €2bn in 12-month bills paying an average interest rate of
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3.4pc, up from 2.4pc in the last such auction in November. For some €500m in
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18-month bills it paid a 3.7pc interest rate, up from 2.7pc last month.
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Borrowing costs in weaker eurozone countries including Ireland and Portugal
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have been rising since the Greek debt crisis in May and on Tuesday yields on
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10-year bonds in these countries continued to rise.
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Last week the ECB bought the most sovereign debt since June as it attempt to
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calm market fears but there are doubts about how far it can go with this
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tactic.
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## Related Articles
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* [Eurozone will have to 'rebalance', warns OECD][3]
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14 Dec 2010
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* [Higher interest rates loom for the US and UK][4]
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14 Dec 2010
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* [New eurozone crisis could derail Britain - Bean][5]
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13 Dec 2010
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* [Euro will not fail, say Schaeuble and Major][6]
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12 Dec 2010
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* [Euro has 'one in five chance' of survival - CEBR][7]
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13 Dec 2010
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* [The eurozone is in bad need of an undertaker][8]
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12 Dec 2010
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Markets are looking for a more united approach to Europe's debt crisis but
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have been put off by division among nations over how to move forward.
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On Thursday and Friday, EU leaders are expected to approve a permanent
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eurozone crisis fund that Economics Affairs Commissioner Olli Rehn said will
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provide a "systemic" response to the eurozone debt and deficit crisis.
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The ECB said in a statement: "We are not completely satisfied with the
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proposals put forward by the (EU) Commission and the European Council Task
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Force that should aim at strengthening the system of economic governance in
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Europe."
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Governments have stopped short of more automatic penalties that the ECB had
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demanded, Mr Trichet said, adding: "These proposals in our view do not yet
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represent the quantum leap in economic governance that is needed to be fully
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commensurate with the monetary union we have created."
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He wants sanctions to be applied in a "quasi-automatic" way and include fines
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and "possible limitations of voting rights for member states in persistence
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violation".
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"Effective monitoring required adherence by members to the policy framework,
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it requires peer pressure and consequences to deal with deviant behaviour, and
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it requires reliable statistics," the ECB statement said.
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Greece, for example, joined the eurozone with bogus figures, and growth data
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since 2004 are still not considered final by the EU's Eurostat statistics
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service.
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Meanwhile, the ECB president reiterated its opposition to a common eurozone
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bond as proposed by Luxembourg Prime Minister Jean-Claude Juncker - a proposal
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that has been rejected by Germany.
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The euro rose to $1.3475, benefiting from a falling dollar ahead of a Federal
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Reserve rate decision later after Moody's warning that US tax-break proposals
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could damage the American economy.
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[What are these?][10]
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* Share: [Share][9] [ ][11] [ ][12]
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[Tweet][13]
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http://www.telegraph.co.uk/finance/financialcrisis/8201223/ECB-urges-bigger-
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rescue-fund-as-bond-investors-punish-Spain.html
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Telegraph
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## [Financial Crisis][14]
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* ### [Finance »][15]
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* ### [Business Latest News »][16]
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* ### [EU »][17]
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In finance
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[![Truncheon-wielding police in Barcelona have clashed with protesters at a
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makeshift camp that is one of dozens erected in Spain to protest at high
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unemployment][18] ][19]
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### [Spanish anti-crisis protests][19]
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[![Thousands of protesters occupy Puerta del Sol square in Madrid][20] ][21]
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### [Huge protests in Madrid][21]
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[![Riot police use tear gas as protesters throw petrol bombs in Athens][22]
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][23]
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### [Tear gas and petrol bombs][23]
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[![Irish bank stress tests: the key points][24] ][25]
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### [Irish bank stress tests: key points][25]
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[![Q&A: What is the Independent Commission on Banking?][26] ][27]
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### [Q&A: What is the Independent Commission on Banking?][27]
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[X][9] Share & bookmark
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Delicious Facebook Google Messenger Reddit Twitter
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Digg Fark LinkedIn Google Buzz StumbleUpon Y! Buzz
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[What are these?][10]
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Share:
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* [ ][9]
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* [ ][11]
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* [ ][12]
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* [Tweet][13]
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* Advertisement
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![][28]
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telegraphuk
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Please enable JavaScript to view the [comments powered by Disqus.][29] [blog
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comments powered by Disqus][30]
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[![][31]][32]
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Advertisement
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[Market Data »][33]
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