Europe Not at Stage Where ESM Has to Jump In, Gramegna Says

The situation in euro-area bond markets is contained and far from requiring intervention from the bloc’s rescue fund, according to European Stability Mechanism Managing Director Pierre Gramegna.

“We have a full range of instruments that can be used, and obviously we monitor the situation all the time,” he told Bloomberg Television in Bangkok. “But we are not at all at the stage where the ESM has to jump in.”

Speaking on the sidelines of the International Monetary Fund’s annual meetings, he also highlighted that markets are still under control.

“What we have seen is that also the spreads that we have today they are higher than they were two months ago, but they are also contained compared to what they were in the international financial crisis,” he said. “The euro area has a lot of solidity, stability today.”

France’s fiscal and political difficulties have fueled a sovereign debt selloff that has sent the country’s borrowing costs to highs not seen since the euro-zone crisis. Gramegna, who was Luxembourg’s finance minister during that period, described that as the bloc’s “teenage crisis.”

He also highlighted that “France has always complied with our budgetary rules” and that the “government has announced a very ambitious budget.”

“The first thing to do in such a situation is that every country, not only France, does his homework,” Gramegna said. “And France has announced that it intends to do so.”

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