La Razon / El Banco European Central Bank (ECB) today published the correspondence in 2011 between the former bank president Jean-Claude Trichet and former head of the Spanish Government José Luis Rodríguez Zapatero.
In a letter dated August 6 2011, Zapatero Trichet wrote to the Spanish government would undertake measures “in line with the proposals” made by the President of the ECB in an earlier letter and asked him to intervene in the sovereign debt market to help Spain.
Zapatero referred to new initiatives for fiscal consolidation to reduce the budget deficit by 0.5% of Gross Domestic Product (GDP), with the aim of not exceeding 6% in late 2011.
Specific plans included a reduction in drug spending 2,400 million euros, improvements in the management of corporation tax of 2,500 million euros in 2011, additional revenue from auctioning of the spectrum in the amount of 2,000 million and structural measures for the labor market.
Zapatero cited “the reform of collective bargaining” to increase business flexibility and intent of the Spanish Government to adopt “regulatory changes in labor regulations, improving flexibility in hiring in order to increase job creation. “
He remembered the unions agreed not to link wage increases with inflation, but with productivity, following one of the objectives that were established Trichet his previous letter.
Trichet Zapatero expressed concern about the impact of financial stress at that time for Spain, and the difficulty that the reforms were fully operational short term.
“It is impossible that such reforms are fully operational in the near term to correct the dysfunctions that are occurring right now in the financial markets,” Zapatero stated in the letter.
He added that “the Government of Spain considers that the European Central Bank can play a crucial role in reducing tensions through the purchase of Spanish public debt sufficient to stabilize markets and ensure proper operation of the transmission mechanism of monetary policy volume. ”
Such actions should maintain its impact to the possibility of intervening in the secondary market through the European Financial Stability Facility (EFSF in its English acronym), pointed to the then president of the Spanish Government.
“I trust that the Governing Council of the European Central Bank contribute to the adoption of this measure to meet the exceptional circumstances that threaten the euro area,” said Zapatero.
With information La Razon
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