The eurozone has reached a crucial juncture and its leaders will work with the European Central Bank (ECB) to save the single currency, Eurogroup chief Jean-Claude Juncker said in interviews published on Sunday.
“We have come to a crucial point. But we have to outline the pace and scope. We will act together with the ECB,” he told France’s Le Figaro daily, speaking of the European Financial Stability Facility (EFSF) bailout fund.
“There is no more time to lose,” he said, adding that a review of the markets would be decided in the coming days.
In a separate interview with Germany’s Sueddeutsche Zeitung. Juncker said: “[The] eurozone has come to a stage where we must clearly show through all means possible that we are firm on assuring the stability of the monetary union.
“Nobody should doubt the will of the involved forces to show their determination,” he said.
His comments came after ECB President Mario Draghi sent stock markets soaring and helped bring down Spanish borrowing costs sharply last week by saying the central bank was “ready to do whatever it takes to preserve the euro. And believe me it will be enough.”
German Chancellor Angela Merkel and French President Francois Hollande followed up his statement with a similar joint declaration on Saturday, although they did not pledge any specific action.
On Sunday, Merkel, seen as the linchpin of any possible crisis response, reiterated her determination to keep the 17-nation bloc together following a weekend phone call with Italian Prime Minister Mario Monti.
The two leaders “agreed that Germany and Italy will do everything to protect the eurozone,” they said in a joint statement.
Asian markets mostly rose for a second straight session yesterday on hopes for new rounds of central bank stimulus in Europe and the US to kickstart their troubled economies.
Tokyo closed up 0.8 percent, or 68.80 points, at 8,635.44; Sydney gained 0.85 percent, or 35.9 points, to 4,245.7; and Seoul also climbed 0.8 percent, adding 14.63 points to 1,843.79.
Since the start of the crisis, the ECB has lost no time in embarking on a series of emergency measures — in addition to cutting rates — to stem the turmoil. The EFSF rescue fund currently has a little more than 200 billion euros (US$245 billion) to spend, not enough to fly to the rescue of Italy should it need a full-blown Greece-style rescue, but sufficient to have an impact on the market.
Juncker on Sunday also brushed off a suggestion by German Finance Minister Philip Roesler of Greece’s eventual exit from the eurozone.
“Those who think of resolving the problems of the eurozone in this manner by excluding Greece or letting it fall in the wayside have not identified the reasons for the crisis,” he told the German newspaper.
Spain is hoping a 100 billion euros credit line agreed for its banking sector will flow directly to the banks, allowing Madrid to avoid the damaging fallout likely from a request for a full-blown bailout.
The EFSF is to be replaced next year by the European Stability Mechanism, which is expected to come into force later this year.