Spanish Prime Minister Mariano Rajoy said European leaders should reinforce efforts to protect euro- area banks, ratcheting up pressure on German Chancellor Angela Merkel to back new ideas for a resolution of the debt crisis.
With markets bracing for further deterioration in Spain’s finance sector and a possible Greek departure from the 17-member euro area, Rajoy on June 2 added his voice to calls for a more robust “banking union” in Europe, lending his support for a centralized system to re-capitalize lenders. On the same day, Merkel toughened her opposition to euro-area debt sharing, telling members of her party in Berlin that “under no circumstances” would she agree to German-backed euro bonds.
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