HIGHLIGHTS-Euro zone finance ministers meet to discuss Spain, Greece

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LUXEMBOURG, Oct 8 (Reuters) - Euro zone finance ministers gathered in Luxembourg on Monday to discuss Spain, Greece and other issues related to the region's debt crisis, including what needs to be done to establish a single supervisory authority for euro zone banks.

Following are comments from the ministers and other senior officials as they arrived for the talks:


"Greece must find away out of its crisis through reforms and (fiscal) consolidation. That cannot be done by other countries. They must do that. We are waiting for the Troika report, we can't get ahead of ourselves, but it is really up to Greece to resolve this on its own. That is all important and the ball is in their court. There are risks attached (to the loans to Greece)."


"The start of the ESM marks a historic milestone in shaping the future of the European monetary union. The euro area now is equipped with a permanent and effective firewall, which of course is a crucial component in our strategy to ensure financial stability in the euro zone."

On Spain:

"To a large extent I'm satisfied with the fiscal consolidation measures taken so far by the Spanish government. It is not up to me nor to us as members of the eurogroup to advise the Spanish government to make a request."


"The instruments of the ESM are the same as the instruments of the EFSF, namely country programme loans under full adjustment, precautionary arrangements, interventions on primary and secondary market and bank recapitalization via the treasury of a country. Those are the instruments of the EFSF and those are also the instruments of the ESM.

For the ESM, our body is in the process of looking at the option of inserting this tool (of leveraging first loss guarantee) also in the ESM framework but this has not yet happened so far. My expectation is it will but it has not happened so far."


"The inauguration and start of operations of the European Stability Mechanism is a very important milestone for the euro zone and the the European Union. It provides the euro zone with a robust and permanent firewall and it provides us with a strong toolbox of effective and flexible instruments.

Thinking of where we were two and a half years ago when we had no instruments of crisis management, we had to create the Greek loan facility and the temporary European facility, we are moving forward and we are supplementing the economic and monetary union with one important building block.

Nobody is in party mood but I am less pessimistic for the moment for the euro zone than in the spring."


On direct recapitalisation of banks by the eurozone's permament rescue mechanism, the ESM:

"The policy position as set out by the heads of state and government on the 29th of June is the policy that prevails. We have had assurances of that from the (European) Commission and from the European authorities."

EUROGROUP CHAIRMAN JEAN-CLAUDE JUNCKER On idea of single euro zone budget: "I myself am not opposed in principle to a euro zone budget. On Greece:

"I don't think that we will have any major decisions on Greece (today). We will be briefed by our Greek colleagues and by the troika (the inspectors from the European Commission, IMF and ECB) on the negotiations between Greece and the troika.

Asked about a decision soon on Greece: "Hope never dies." LUXEMBOURG FINANCE MINISTER LUC FRIEDEN

"Spain doesn't need any help at this moment. They didn't ask for any help.I think we should deal with such a request when it comes but so far the Spanish government is undertaking reforms which go in the right direction.

Asked whether Greece needs more time or money

"Greece is doing a lot of efforts. It's very difficult down there. And I think if we need to give them additional time, if that does not require a lot of additional money, we should support Greece. This is not a one-way street. It requires that greece is undertaking and continues to undertake the reforms which the government is committed to.

On whether funds from the euro zone's permanent rescue fund, the ESM, should be used for banks' legacy problems:

"We shouldn't talk up a new problem every day. This is a subject that needs to be sorted. We should not rule out to do everything possible if we want stability, to check if we can make use of the instruments that we have when something has gone wrong in the banking sector. At least now we have instruments."


"We like our currency, the euro, and we will not only protect it through the central bank but we will also protect the euro zone, the states when they get into difficulty, through these instruments (ESM).

"We have come a long way towards stability but we are not out yet over our problems. We must stabilise the banks in spain, see that greece fulfills its conditions. There will likely be an application from cyprus. Slovenia has difficulties. We must see that in europe the debts don't get over our heads.

"We have the banking application from Spain. It has a potential capacity of 100 billion euros. We are likely to hear today that this 100 billion euros is not all needed, that Spain needs significantly less."


"Spain needs no aid programme. Spain is doing everything necessary, in fiscal policy, in structural reforms. Spain has a problem with its banks as a consequence of the real estate bubble of the past years.

"That's why Spain is getting help with banking recapitalisation. And of course Spain, like other countries, is suffering from the problem of contagion, speculation on financial markets... but Spain needs no aid programme. That's what the Spanish government says again and again."

On Greece

"The chancellor is not the troika. The chancellor is travelling to greece just like she travels to many other european countries and just like the greek prime minister came to Berlin.

"We have intensive bilateral cooperation to help Greece in building a competitive economy.

"Germany is doing whatever we can do to help Greece on its difficult path. But the troika has a job of its own. It has to report whether Greece is fulfilling the obligations from the second aid programme and if the troika can report that then the conditions for the disbursment of the next tranche are given. But that's not on the agenda of the visit in Athens."

On direct banking recapitalisation from the ESM

"The agreements will be stuck to. That's what we do with Greece, with Portugal and of course as with the agreement of the heads of state and government of end-June that says that once a European bank supervision has been implemented that then as part of the further conditions direct bank recapitalisation is an option but further conditions means an application by the member state in question, an adjustment programme that is agreed with the member state and we will talk about implementing a european banking supervision tomorrow. That's harder done than agreed."

(Reporting by Annika Breidthardt, John O'Donnell, Eva Kuehnen, Robin Emmott and Jan Strupczewski in Luxembourg; editing by Luke Baker)