The euro zone needs to increase its fiscal integration even if it means that member countries could lose some autonomy, Spanish Prime Minister Mariano Rajoy said Saturday.
During a televised speech from the Catalonian city of Sitges, Mr. Rajoy said Europe has to reinforce its common institutional structure for markets to regain confidence in the single currency, including the establishment of a central authority to oversee and harmonize the euro area countries’ fiscal policy.
Mr. Rajoy who came into office six months ago, has been struggling with the European Union’s highest jobless rate, a contracting economy and a troubled banking sector. Concerns about the country’s troubles are helping to push its bond yields to record levels and further restrict Mr. Rajoy’s options.
“Spain is a factor in this situation, but it is one of many. It isn’t the only one and it isn’t the worst. So if it is urgent to resolve the Spanish situation, it is no less urgent to solve the problems of the monetary union as a whole,” Mr. Rajoy said during the speech.
The Spanish prime minister praised European Commission President Jose Barroso’s suggestion for the EU to integrate members’ bank regulators and deposit guarantee funds, and to create instruments for the direct capitalization of European banks.
The Spanish government is firmly committed to cutting its budget deficit, and a lower deficit will increase financial markets’ confidence in the country and reduce its financing costs, Mr. Rajoy said.
“The final goal is economic recovery and new job creation,” he said.