MADRID (AP) â¿¿ Spain's prime minister appealed Tuesday for European leaders to push toward greater fiscal unity â¿¿ a step that would allow its troubled banks to get direct financial help â¿¿ while a top government official warned that the country's high borrowing costs meant it faced increasing trouble accessing credit markets.
Mariano Rajoy told a Senate session that Europe "needs to support those that are in difficulty."
"It needs fiscal integration with a fiscal authority and banking integration, a banking union with eurobonds, a banking supervisor and a European guaranteed deposit fund."
European leaders are to hold a summit on June 28 on how to stop the 17-country eurozone from collapse. The European Commission and the European Central Bank are expected to present measures at the meeting for creating a "banking union" that would oversee banks and possibly offer bailouts directly, bypassing national governments.
Spain is keen for its banks to be able to seek help directly because if the government were to ask for it from the EU bailout fund, the aid would come with strings attached â¿¿ its fellow countries in the 17-nation eurozone and the International Monetary Fund could impose certain policies on the Spanish government, something the country is keen to avoid.
Spain's most stricken lender, Bankia S.A., needs â¿¬19 billion ($23.63 billion) in government aid, but Spain only has â¿¬5 billion left in a â¿¬19 billion fund that it established in 2009 to help banks. The government has promised to help Bankia but has not mapped out a plan.
The country has become the focus of Europe's debt crisis because bailing out the eurozone's fourth-largest economy would stretch the region's finances to breaking point.
Rajoy was speaking as finance ministers and central bank presidents of the world's seven wealthiest countries held an emergency conference call about Europe's economic turmoil.