BADEN-BADEN, Germany (Reuters) - German Finance Minister Wolfgang Schaeuble praised Spain for its decision to seek aid from its euro zone partners on Saturday, telling Reuters in Baden-Baden that the country was taking “big steps” to get its economic and financial problems under control.
Schaeuble said that Spain, which on Saturday became the fourth country to seek assistance since Europe’s debt crisis began, was on the right track.
“Spain has taken big steps to get its economic and financial problems under control,” Schaeuble told Reuters in an interview in the southwesetern town of Baden-Baden. “It has launched profound structural reforms. Spain, and that is what all international institutions are saying, is on the right path.”
Schaeuble has said he believes Spain will be able to solve its banking problems step by step and said Spain’s problems are linked specifically to the collapse of the country’s real estate boom.
“Because of the high burdens arising in the wake of the construction and real estate boom and the current high interest rate levels, Spain has not been able to raise the capital it needs on financial markets and thus requested help from Europe to recapitalize banks.”
”We agreed to that in principle,“ Schaeuble added in the interview. ”But that money will nevertheless be going to the Spanish state. Just like every other member state, Spain is responsible for its banks and to furnish them with sufficient capital.
“And that will be done under the condition that Spain will implement a corresponding adjustment program for the banks that will have to be negotiated with international institutions.”
Schaeuble reiterated his view it was the right decision.
“I believe it is the right step and an important step,” he said. “It will be able to eliminate the uncertainty in the markets that have arisen from the Spanish financial sector and that’s why, I believe, this is a good day!”
Schaeuble said it should calm the nervousness in the markets.
“We’ve had a very nervous situation once again because of a convergence of a variety of reasons,” he added. “We were actually headed in a good direction in the first quarter but then the fact that the new elections in Greece didn’t lead to the formation of a government caused uncertainty.”
Spain suffered as a result of that, he added.
“And in this nervous situation, the financial markets tumbled onto the problem of the high burdens on the Spanish banks because of the real estate loans and that’s why we urged Spain to make decisions that would make it clear that the problems with the Spanish banks would be resolved.”
Writing By Erik Kirschbaum; editing by Soeren Amelang