Draghi: ECB will do “whatever it takes” to save Euro
The European Central Bank (ECB) will meet today speculation amidst suggestions that it will take drastic action to bring down Spanish borrowing costs.
It is expected that officials will look to avoid a Spanish bailout at all costs, after ECB president Mario Draghi stated last week that he was “ready to do whatever it takes” to save the euro. Draghi now faces intense pressure to fulfil his pledge to rescue the weakened currency.
“Expectations are very high, the markets recognise that past measures simply haven’t worked,” said David Llewellyn, vice chairman of the Banking Stakeholder Group at the European Banking Authority.
“Above all if nothing is done to lower and stabilise the borrowing costs of countries like Spain and Italy then their future within the euro must be in question.”
On Thursday, the Spanish government auctioned off 3.1bn euros of two, three and ten-year bonds on Thursday in an attempt to alleviate the current financial crisis. However, borrowing costs remain high for Spain, at 6.56% on 10-year bonds, after the 10-year yield reached a record 7.6% last week – a level which would make regular borrowing to pay for salaries and bills unaffordable for the country.
Spain has already received 100bn euros of financial aid to help its struggling banks, but fears continue to grow that the sum will prove not enough. Greece, Portugal and the Republic of Ireland had similarly high borrowing costs when they received international bailouts.
Draghi will hold a press conference later on Thursday.
Is a Spanish bailout now inevitable?
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