Paris - AFP
Top European finance ministers vowed to respond \"speedily\" to the continent\'s debt crisis as Spain pleaded for help for its struggling banking system so as to avoid a full and humbling bailout. Eurozone member Cyprus also warned that there was a serious possibility it may need EU aid to save its banking system, which is heavily exposed to twice bailed-out Greece. \"We were able to share our recognition on the European issue,\" Japan\'s Jun Azumi was quoted as saying by Jiji Press after finance ministers and central bank chiefs from the world\'s seven top developed nations held a conference call. \"The European side stated that they will respond to it speedily,\" he added. The US Treasury confirmed in a statement that Europe was a key topic of the call, saying the ministers and governors reviewed developments in the global economy and financial markets \"and the policy response under consideration, including the progress towards financial and fiscal union in Europe.\" The White House said it hoped for \"accelerated\" action in coming weeks ahead of the G20 summit in Mexico, on the euro crisis and shoring up debt-ridden banks. \"European leaders seem to be moving with a heightened sense of urgency and we welcome that. We are hoping to see accelerated European action over the next several weeks,\" White House spokesman Jay Carney said. \"A movement to strengthen the European banking system will be of particular importance in this time period.\" European leaders are under mounting pressure to take bold steps at an end-June summit to save the euro as eurozone states buckle under the pressure of recession and debt. Spain pleaded for deeper fiscal and banking integration among eurozone states and for changes that would allow EU funds to help its struggling banks without the state being forced into a tough bailout. \"Europe must say where it is going, to give itself unity, it must say that the euro is an irreversible project that is not in danger, it must help nations in difficulty,\" Spanish Prime Minister Mariano Rajoy told lawmakers. \"In my opinion it needs fiscal integration, with a fiscal authority, and banking integration, a banking union with eurobonds, with a banking supervisor and a European bank deposit guarantee fund.\" Spain wants the EU to allow the European Stability Mechanism (ESM) bailout fund -- due to come into force in the coming weeks -- to recapitalise its banks directly which are struggling to raise 80 billion euros to shore up their books after a property boom went bust. The fund is intended to be used to help finance debt-laden governments and not banks. Madrid would prefer the fund be used to directly help its banks, avoiding the need for the state being forced into a bailout to avoid a banking collapse as in Ireland. A bailout from the EU and the International Monetary Fund would come with a politically humiliating austerity programme attached to it. Germany has opposed changing the ESM\'s rules to allow direct intervention in banks until the eurozone puts into place stronger measures on banking and fiscal integration. Berlin sees banking and fiscal union -- which would entail massive shifts in sovereignty over budgets and supervision of lenders -- as medium- and long-term projects. The European Commission will on Wednesday unveil new plans for winding up failing banks, one of the pillars of the EU\'s drive towards an integrated eurozone \"banking union,\" according to a presentation seen by AFP. The latest EU response to the crisis is to integrate the eurozone\'s national banking systems in a bid to avoid investor flight or runs on banks in one country, such as Spain, dragging down the entire system, it showed. Spain\'s sovereign debt risk premium -- the extra return investors demand to hold Spanish bonds over their safer German counterparts -- stood at 5.23 percentage points on Tuesday, near a euro-era record of 5.48 percentage points struck last week as investors fear Madrid will be forced into seeking a bailout over the banks. Rajoy said Spain\'s \"most urgent\" problem right now is its difficulty in financing itself because of the steep risk premium, with its borrowing costs above 6.0 percent widely seen as unsustainable in the longer term. \"It is very difficult to refinance ourselves. Spain is in an extremely difficult situation,\" he said. Bailing out Spain, the fourth largest economy in the eurozone, would be costly. Spain\'s economy represents 12 percent of the eurozone\'s output -- twice that of Ireland, Portugal and Greece combined, whose rescues have so far cost 455 billion euros. Cyprus, which has been shut out of the bond banks, also sounded the alarm Tuesday over its banks. \"The possibility of addressing the financial stability mechanism to support the banking system, due to the problems created by excessive exposure of banks to Greece, is a serious possibility,\" deputy government spokesman Christos Christofides told reporters.