“It would be constructive to find a flexible way for Europe to help on the
banking side,” Borg said, speaking in Copenhagen at the annual conference of
the powerful global banking lobby’s Institute of International Finance (IIF).
“Otherwise that uncertainty would remain in the market,” he added.
The German government reiterated Wednesday its opposition to allowing troubled eurozone banks direct access to European Union rescue funds such as the European Financial Stability Fund or the European Stability Mechanism.
Borg stressed that if the banks were allowed to receive assistance “you need to be tough … (because) we’re talking about other countries’ money,” which would be injected into the Spanish banks.
However, “you should be much more careful on the liability side,” to avoid depleting confidence in the banks, the Swedish minister said.
Borg added that in his mind, the controversial eurozone “banking union” project should be seen as a long-term “structural reform”, and that Europe needed other measures to address immediate woes.
“Don’t yet lose focus on short term issues,” he said, insisting that the immediate aim should be “to recapitalise and to get uncertainty down in the banking system.”
Speaking at the same IIF round-table, Danish Finance Minister Bjarne Corydon cautioned that “we’re nowhere near an end to the euro crisis,” but stressed that the common currency bloc was basically a “sound construction.”