FRANKFURT (Reuters) - Bundesbank President Jens Weidmann welcomed an agreement by euro zone finance ministers to lend Spain up to 100 billion euros to shore up its teetering banks but said the Spanish government must pursue economic reforms further.
After Greece, Ireland and Portugal, Spain became the fourth euro zone country to seek international aid in the three-year-old debt crisis on Saturday.
“It is important that Spain uses the instruments that were made available,” Weidmann told German TV network ARD in an interview on Sunday.
“I have faith in the Spanish government, which has already implemented far reaching structural reforms in the labour market, but it has to pursue this path,” he said.
The agreement to help Spain occurred about a week ahead of an election in Greece that could push the country out of the euro zone if radical leftists get into power who do not support the terms of Greece’s EU/IMF bailout program.
“The new Greek government, once it is formed, has to send a clear signal whether it is ready to implement the agreed reform measures. It is in Greece’s hands to decide,” said Weidmann.
He said Greece had to stick to the program to get further financial support, as it would otherwise cast doubts over the binding effect of other euro zone program, like those for Ireland and Portugal.
Weidmann reiterated that commonly issued euro zone debt could be introduced only at the end of a closer fiscal and political integration in the euro zone.
“The idea to launch joint liability (in the euro zone) without having credible rights to intervene is wrong,” he said.
Reporting By Eva Kuehnen and Paul Carrel; Editing by Ralph Gowling