Prime Minister Mariano Rajoy said he would ask the European Central Bank to buy Spanish bonds “if it seems reasonable,” as he moved to extend unemployment subsidies for some of the nation’s 5.7 million jobless.
Rajoy’s only criterion will be “defending the general interests of Spaniards,” he told reporters today in Palma de Mallorca after meeting King Juan Carlos. The day before an extraordinary jobless subsidy was set to expire, Rajoy also said the government will extend payments for another six months amid a jobless rate of 25 percent.
Spanish 10-year bond yields rose to a euro-era high of 7.62 percent on July 24, exceeding the threshold that prompted full sovereign bailouts in Greece, Portugal and Ireland. Yields have fallen since ECB President Mario Draghi said on Aug. 2 the bank would buy sovereign bonds if countries applied for similar support from Europe’s rescue fund and accepted strict conditions in return.
The government sought a European bailout for its banks of as much as 100 billion euros in June “because it seemed reasonable,” Rajoy said. “And now, if it seems reasonable, we will do the same,” he said. “As is logical, until we know what we are talking about, we aren’t going to take any decisions.”
Draghi said that details of how the mechanism will work will be thrashed out by ECB committees. The ECB would focus on shorter-dated securities as that’s within the remit of monetary policy and would only intervene in tandem with the bailout funds to which euro-region governments contribute, he said.
Rajoy, who met Italian Prime Minister Mario Monti in Madrid as Draghi was announcing his crisis plan, will make a return visit to Rome on Sept. 20-21, he said. German Chancellor Angela Merkel visits Madrid on Sept. 6, he said.
To contact the reporter on this story: Emma Ross-Thomas in Madrid at firstname.lastname@example.org
To contact the editor responsible for this story: Craig Stirling at email@example.com