Germany, France reconnect in joint push to fight crisis

Spain’s Banks

The German-French working group will prepare the implementation of agreements reached between Greek Prime Minister Antonis Samaras and Merkel and Hollande, Schaeuble said. The two countries will also be in close contact with the Spanish government to allow swift decision-making on implementing Spain’s bank-recapitalization program, he said.

“We value the integrity, sustainability and stability of the euro region,” Moscovici told reporters, adding the two states will work on “structural” solutions.

Spain and Italy, the countries most exposed to contagion from Greece, have yet to decide whether they will seek ECB help to lower bond yields. Draghi said Aug. 2 that the ECB might enter debt markets in tandem with Europe’s rescue funds in return for strict conditions on the countries in need of help.

Hollande will travel to Madrid on Aug. 30 for talks with Spanish Minister Mariano Rajoy, the French president’s office said today. Rajoy has said he will host Merkel in the Spanish capital the following week, on Sept. 6.

October Report

Merkel and Hollande agreed last week to await the report from the troika of the ECB, the European Commission and the International Monetary Fund before making a decision on whether to ease the terms of Greece’s $240 billion lifeline.

That report could come in “late September or early October” after troika officials return to Athens at the beginning of next month, Commission spokesman Simon O’Connor told reporters in Brussels today.

Draghi may wait until Germany’s Constitutional Court rules on the legality of the permanent bailout fund before unveiling full details of his plan to buy government bonds, disappointing investors who might have expected an announcement on Sept. 6, two central bank officials said last week.

Schaeuble said that he and Moscovici talk on the phone once a week and meet in person at least every other week. The working group now being established “is proof just how close our cooperation is,” he said.

Bloomberg News

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