FRANKFURT (MNI) – Talks on European aid for Spain are progressing
well, German Finance Minister Wolfgang Schaeuble said Monday, but he
warned that it would take more time than many expected to create the
European banking supervision mechanism that would that allow aid to go
directly to Spain’s troubled banks.
“The negotiations (with Spain) are on a good path,” Schaeuble said
ahead of a meeting of the Eurogroup in Brussels. “I think we will also
be able agree on a binding framework and a timeline” for providing aid
to Spain from Europe’s EFSF/ESM bailout funds.
But Schaeuble made clear that the ESM would not be allowed to
invest directly in Spain’s banking system until a single European
banking supervisor is “in place, and functioning. Then we can reach the
resulting decision” on direct bank recapitalization.
Schaeuble said a misreading by many of the outcome of last month’s
EU summit has “once again led, as has often happened before, to false
expectations being portrayed in the markets.”
“The creation of a European banking supervisor is no small thing,
it’s a huge task,” Schaeuble said.
With the European Commission scheduled to make proposals for the
bank supervisor by September, Schaeuble said “we will certainly not
speculate” on timing until those proposals have come in.
Schaeuble also said he did not expect Monday’s Eurogroup session to
take any decisions on Greece, arguing it was too early and progress in
Greece still needed to be more fully reviewed.
— Frankfurt bureau: +49 69 720 142; email: ccermak@marketnews.com
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