The euro area took “decisive action” in agreeing to provide Spain with a bailout of as much as 100 billion euros ($125 billion) to shore up its banking industry, European Union Economic and Monetary Affairs Commissioner Olli Rehn said.
The total amount includes “a safety margin,” Rehn said today in the text of remarks to the European Parliament in Strasbourg, France.
Rehn cited European Commission reports released on May 30 saying Spain is among EU nations with “serious” economic imbalances. “Based on the in-depth reviews, the commission concluded that Spain and Cyprus are facing very serious imbalances, not least in their financial sectors, which need to be addressed as a matter of urgency,” Rehn said.
Cyprus Finance Minister Vassos Shiarly said today that requesting an EU rescue was one of the options under consideration as it struggles to recapitalize its second-biggest bank. Cyprus, the euro zone’s third-smallest economy, has been shut out of markets for more than a year.
Rehn said the “unprecedented strengthening” of economic and fiscal coordination in the euro area over the past two years “has been accompanied by a certain degree of risk mutualisation.” The “renewed intensification” of the debt crisis “has shown that we need to think beyond these achievements,” he said.
“We need to map out the main steps towards full economic union, to complement and strengthen our existing monetary union,” he said. “Demonstrating the unequivocal political commitment of member states to the euro will be part of restoring confidence in the euro area.”