Aug. 6 (Bloomberg) -- Italy’s Prime Minister Mario Monti warned of a potential breakup of Europe without greater urgency in efforts to lower government borrowing costs, as a stand-off over European Central Bank help for Italy and Spain hardened.
Monti, in an interview with Germany’s Der Spiegel magazine published yesterday, said that disagreements within the 17- nation euro area are detracting from the policy response to the debt crisis and undermining the future of the European Union.
French President Francois Hollande is pushing Monti and Rajoy to request aid from Europe’s bailout fund to help ease markets and protect France from speculation, Italian newspaper la Repubblica reported, without citing anyone. Monti may speak with Draghi today, the newspaper said.
Kiss of Death
“We made a lot of good progress,” Poul Thomsen, the IMF’s representative to Athens, said after a meeting with Finance Minister Yannis Stournaras ended yesterday. The troika will return to Athens in early September.
Investors and politicians are meanwhile grappling with the significance of Draghi’s comments on sovereign debt purchases. While markets initially tumbled after Draghi said Spain and Italy would have to formally request a resumption of the bank’s bond buying in conjunction with Europe’s bailout fund, thus entering into a rescue program with tough conditions, they rallied the following day as investors concluded that ECB action would happen, albeit on an unknown future date.