Group of 20 leaders meeting in Mexico pressed Spain to formulate its request for aid to rescue its blighted banks and help resolve the euro-area crisis, German Chancellor Angela Merkel said.
“All agreed that once audit results are available, then Spain should make its application as soon as possible,” Merkel told reporters today in Los Cabos. “Spain will make its request soon.”
“We also talked about how we need clarity on Spain’s application as soon as possible,” Merkel said. “We all know that banks that aren’t properly capitalized are a source of turmoil and risk for the economy.”
Merkel was speaking on the final day of a G-20 summit dominated by the financial turmoil in Europe, as Spain’s borrowing costs soared beyond the 7 percent level that triggered Greece, Ireland and Portugal to call for a sovereign bailout from the European Union and International Monetary Fund.
That stoked speculation Spain may need to request a similar bailout after the government called for as much as 100 billion euros ($126 billion) to shore up its banks.
Merkel declined to signal any easing of the bailout terms for Greece, saying that she asked IMF chief Christine Lagarde to send officials to Greece as soon as possible after a government is formed.
“We will wait for the result,” Merkel said. “There’s no point in speculating. We should very tightly keep to the rules and it’s obvious that the reforms that were agreed in the past were the right thing and have to be implemented. Now I’m waiting for the troika report.”
Merkel said that world leaders discussed the crisis in a “spirit of camaraderie.”
She told the others that “we have problems in the euro area and that we need to take action,” Merkel said. “I have the impression that the global community want this effort to succeed.”