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ECB debt at record high

Spanish banks’ net borrowing from the European Central Bank hit a record high in August climbing to €388.7 billion ($502 billion) last month from €375.5 billion ($485 billion) in July, according to the figures released by the Bank of Spain.

india Updated: Sep 14, 2012 23:36 IST

Spanish banks’ net borrowing from the European Central Bank hit a record high in August climbing to €388.7 billion ($502 billion) last month from €375.5 billion ($485 billion) in July, according to the figures released by the Bank of Spain.

Meanwhile, the European Central Bank (ECB) rejected a media report Friday which said it is negotiating with the Inter-national Monetary Fund (IMF) on a rescue package for Spain.

“The reporting is unfounded. No negotiations are ongoing. It would be up to (Madrid) to decide to make a request,” said an ECB spokeswoman.

Earlier a report in the Dutch financial daily Het Financieele Dagblad said the ECB is in talks with the IMF on a Spanish rescue package worth €300 billion ($390 billion). Spain said earlier this week it will watch how its borrowing costs evolve before deciding whether to seek a full-blown bailout.

Clears doubts, calms critics
Frankfurt: German Finance Minister Wolfgang Schaeuble on Friday sought to allay fears that Europe’s top economy would have to pick up the tab if other countries could not pay their share of the eurozone’s rescue fund.

Speaking to Deutschlandfunk public radio, Schaeuble said that if a member country could not stump up its proportion of the cash for the massive €500 billion-firewall known as the European stability mechanism (ESM), then Germany — already Europe's effective pay master — would not be left to pay the difference.“If nobody pays into the fund then there'll be nothing there,” he said.

Earlier this week, Germany's constitutional court gave its green light for President Joachim Gauck to sign the ESM into law — a move criticised by many Germans who fear they will end up paying for fellow eurozone members that fail to get their finances in order.