Spanish minister urges swift action

Euro zone countries must take quick action to resolve Greece’s debt crisis to prevent contagion from spreading through the currency bloc, Spain’s Economy Minister Elena Salgado said.

Speaking in an interview published in German newspaper Sueddeutsche Zeitung on Thursday, Salgado said countries that share the euro would do all that was needed to guarantee the currency’s stability, but that fast leadership was required.

“The markets attack all countries that have low growth or high debt, like Italy or Belgium,» she said. «Therefore an answer must be quick, determined, and clear.”

Euro zone officials have struggled even to set a date for leaders to meet to agree a way forward on the debt crisis, raising fears financial markets might exploit a policy vacuum with a new onslaught on the bloc’s high debtors.

An impasse on how and when to grant the country urgent aid remains, although a new sense of urgency may now drive leaders to push for a solution after markets started to focus attention on Spain and Italy.

Most policymakers and the European Central Bank agree a Greek default should be avoided, a positioned echoed by Salgado in the interview, although some countries have acknowledged that a selective default may be needed to untie the knot.

“Everything must be done to prevent such a thing. A default, that is a default of the bonds, would be bad news, especially for Greece,» Salgado said.

Investors fear that a Greek default would ripple through global markets, pushing up sovereign debt yields and weakening Europe’s banking system — requiring more bank bailouts that would stretch public finances to the breaking point.