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Eurozone Rescue Deal For Spanish Banks Welcomed

  • RFE/RL

Traders talk at the stock exchange in Madrid.

Traders talk at the stock exchange in Madrid.

European and international institutions have praised a eurozone bailout package to help Spain save its struggling banking sector.

The G7 group of industrialized nations and the International Monetary Fund (IMF) both welcomed the June 9 100-billion-euro ($125 billion) deal as a step toward greater fiscal unity across the eurozone and preventing a wider economic crisis across the region.

IMF chief Christine Lagarde said in a statement that the scale of the package "gives assurance" that the needs of Spain's suffering banking system would be fully met.

In Brussels, the European Commission likewise welcomed the deal, which came amid mounting global pressure on Spain to look to the eurozone for a bailout.

Commission spokesman Peter Stano praised Spain for requesting support after months of reluctance.

"We are certain that Spain can gradually regain the confidence of the investors and market participants and create conditions for return to growth, to sustainable growth and job creation," Stano said.

The deal was struck following a two-hour emergency meeting June 9 of the finance ministers of the 17-member eurozone.

French Finance Minister Pierre Moscovici said the package sent a "strong signal of solidarity" within the eurozone, at a time when European leaders have been urged to better unify their banking systems to provide greater protection against financial risk.

Spanish Economy Minister Luis de Guindos, who began the day by making the formal request for the 100 billion-euro lifeline, said the package targets the banking system only, and comes with no additional conditions.

"They are very favorable conditions -- more favorable than the market," de Guindos said in Madrid, adding that the funds would be directed to Spain's bank bailout fund, the Fund for Orderly Bank Restructuring. "With the instruments at its disposal, [the FOBR] will inject [the funds] into those Spanish entities that need it."

Spanish officials had been eager to avoid harsh austerity measures and general economic reforms that have been conditions of previous bailout deals in Greece, Ireland, and Portugal.

Eurozone policymakers were hurrying to resolve the Spanish issue before June 17 elections in Greece, where voters angered by austerity measures are expected to throw support behind candidates seeking an exit from the eurozone.

A Greek exit, it is feared, could prompt other struggling eurozone members to follow suit.

The EU and the IMF have now committed to close to 500 billion euros to finance European bailouts in hopes of fending off a eurozone collapse.

With reporting by Reuters and AP

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