www.telegraph.co.uk - Spanish and Italian borrowing costs soared back into the danger zone as traders bet that the policy action by central banks was inadequate defence against the continued political and financial chaos in the eurozone.
The yield on Spain’s benchmark 10-year bond rose above the 7pc bail-out level amid fears that opposition in Germany and Finland could crush the rescue plans agreed in Brussels last week.
The Finnish finance minister, Jutta Urpilainen, said her country was not prepared to keep the euro “at any cost.” She said the euro was “use for Finland”, one of the eurozone’s last remaining AAA-rated countries, but added: “Collective responsibility for other countries’ debt, economics and risks; this is not what we should be prepared for. We are constructive and want to solve the crisis, but not on any terms.”
European stockmarkets fell sharply, the euro dropped to its lowest level for three and a half years against the pound, and the yield on Italian 10-year bonds rose to 6.25pc, despite the move by the European Central Bank, the Bank of England, and the Bank of China to pump liquidity into their economies.
On Friday a frustrated Joerg Asmussen, an ECB board member, said too much was being expected of the Bank. “We must explain what the limits of our powers and mandate are,” he said in a speech. “The ECB cannot compensate for what others - notably political authorities - fail to do.” He added: “There is no substitute for good policies.”
In Brussels there were promises of more solutions at the Eurogroup meeting on Monday. One official told reporters that the 17 finance ministers intended to reach a “political decision” on how to support Spain.
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