European Central Bank Pledges Euro Support

Posted July 26th, 2012 at 9:55 am (UTC-5)
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The European Central Bank says it will do whatever is necessary to preserve the euro.

Bank president Mario Draghi told a London investment conference that Europe's key financial institution is “ready to do whatever it takes” to protect the currency, adding, “And believe me it will be enough.”

His comments suggest the bank could buy Spanish and Italian bonds in the coming days, rather than letting the two countries deal with the uncertainties of the world's financial markets as they market their debt.

For days, Spain's borrowing costs had risen sharply on fears that it, like Greece, Ireland and Portugal, could need an international bailout. But after Draghi voiced his support for the euro, the interest rate on Madrid's and Rome's bonds fell, European stock markets surged and the value of the euro edged higher.

Meanwhile, a Greek finance official says the Athens government has finalized a plan to cut $14 billion from its budget in the next two years, to meet the demands of its international lenders. The budget-cutting could lead to release of a portion of Greece's latest bailout, its second in two years.

The budget agreement came as Greek Finance Minister Yannis Stournaras met with a team of auditors from the European Union, the International Monetary Fund and the central bank to review the country's progress in meeting its austerity requirements.