Mario Draghi’s announcement yesterday that the ECB would ‘do whatever it takes’ to preserve the euro certainly cheered markets up – but only for a while.
Interest rates for Spanish 10-year bonds dropped below the danger threshold of 7 per cent and the euro gained two cents against the dollar. But the more eagle-eyed spotted that this only returned the state of play to where it was on Friday. Draghi’s words were designed as a hint to traders that the ECB was open to emergency support for Spanish and Italian bond markets.
But Reuters is now reporting that Spanish economy minister Luis de Guindos suggested in a meeting with German finance minister Wolfgang Schaeuble last Tuesday that Spain might need a full bailout worth €300 billion.
The Spanish government is denying that this conversation even took place or that there was a need for a full bailout.
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