ECB president won’t give Spain any risk guarantees

European Central Bank President Mario Draghi has rejected calls from Spain for solid guarantees that the ECB’s bond purchasing program will bring down the country’s risk premium rate.

“We cannot offer any early guarantee for the impact of the OMT [Outright Monetary Transactions],” he said during a news conference on Thursday.

The government of Prime Minister Mariano Rajoy has said that it was willing to ask for a bailout package if the ECB can guarantee that Spain’s premium risk will drop to around 200 to 250 basis points.

We cannot offer any early guarantee for the impact of the OMT"

Draghi said that it wasn’t up to the ECB to push countries to ask for a bailout. He said that Spain would have a better picture of its finances when the first assessment by the IMF and the independent audit of the firms hired by the Spanish government become available.

As to the direct recapitalization of the Spanish banks, Draghi said it wasn’t impossible to give the money to the financial institutions without heaping more debt on a country’s government.

“You can have the ESM [European Stability Mechanism] recapitalizing banks with the proper conditionality enforced at the financial sector level, at bank level, even at government level, because there’s nothing to prevent that. But again, we have to rethink the operational processes of the ESM if we want the ESM to do these things.”