France is pressing the EU to adopt a financial stability package to stem the eurozone crisis, believing negative market reaction to the €100bn bailout of Spain’s banks shows the need for more comprehensive action, the Financial Times reported. Ahead of the EU summit due on June 28, Paris is set to propose a package of measures to put the European Central Bank in charge of bank supervision and to use the European Stability Mechanism, the new €500bn eurozone rescue fund due to come into force next month, to recapitalise banks directly.

Crédit Agricole SA is making contingency plans to abandon its Greek bank or merge it with a conglomerate of domestic banks in the event of Greece leaving the euro zone, according to a person with direct knowledge of the plans, The Wall Street Journal reported. The admission offers the starkest evidence yet of international companies preparing for the worst in Greece, just days ahead of elections that could set it on a path to leave the currency union.

Stung by the weekend agreement of a Spanish banking bailout of up to €100bn, policy makers appear to believe that the supervision of banks that pose a systemic risk to Europe should rest with a centralised European authority, rather than national regulators, the Financial Times reported. The idea is part of a broader plan, advocated by architects of the next phase of European integration, to create a “European banking union”, which would also involve a pan-European deposit guarantee scheme.

After clinching a $125 billion bailout for Spain’s banks, Prime Minister Mariano Rajoy flew to Poland on Sunday for the Spanish team’s soccer match, declaring “this matter is now resolved.” Not so fast, prime minister. On Tuesday, Spain’s long-term borrowing costs soared to their highest level since the country joined the euro zone. Investors have apparently concluded that the rescue is potentially a much better deal for the banks and their shareholders than for the government, its taxpayers and bondholders, the International Herald Tribune reported.

Government delays in reforming personal insolvency laws are a “specific source of concern” for the EU-ECB-IMF troika and could, it warned, trigger a deterioration of payment discipline. In their sixth report, seen by the Irish Times, the troika said Nama faces “challenges . . . to meet its debt redemption charges” next year, with bond targets likely to be revised downward. In addition, it warns that, despite cutbacks, “fiscal consolidation is far from complete”.

When primary-school teacher Vanessa Kuhn-Baumann opens her pay statement every month, she thinks dark thoughts about Spain and Greece. Despite the prosperity of her country, her bank statements and tax returns feel like a constant reminder of the price of European solidarity and economic unity, The Globe and Mail reported. Like all Germans, Ms. Kuhn-Baumann has a 5.5 per cent “solidarity surcharge” on top of her income tax withdrawn from her paycheques – a fee imposed in 1991 to pay for the reunification of Germany after the communist German Democratic Republic ceased to exist.

Raising the stakes in Europe's debt crisis, Austria's finance minister said Italy may need a financial rescue because of its high borrowing costs, drawing a sharp denial on Tuesday from the Italian prime minister, Reuters reported. Maria Fekter's assessment of the euro zone's third largest economy stoked investors' fears that Europe is far from ending 2-1/2 years of turmoil - a feeling reinforced by Dutch Finance Minister Jan Kees de Jager, who said the euro zone was "still far from stable".

Spain’s Treasury on Monday vowed to continue as normal with sovereign bond auctions, arguing that the eurozone’s weekend agreement on a €100bn bailout for Spanish banks would underpin the country’s debt market, the Financial Times reported. Market analysts have expressed doubts as to whether the deal to recapitalise banks with a loan injection via Spain’s state Fund for Orderly Bank Restructuring will provide lasting benefits. On Monday morning Spanish bonds rallied, but the euphoria quickly faded.

As Spain became the fourth euro zone country to accept an international bailout, investors turned their nervous gaze Monday to Italy, selling Italian stocks and bonds on worries that Rome could be the next victim of Europe’s financial infection, the International Herald Tribune reported. Italian officials are now privately expressing concern that even a €100 billion, or $125 billion, bailout for Spanish banks may not stop the troubles from spreading.

An adviser to former minister for finance Brian Lenihan has said the format of the bailout deal for the Irish banks was a mistake, which is being repeated again in the rescue package for Spain, the Irish Times reported. Alan Ahearne of NUI Galway said funds should have been injected directly into the Irish banks rather than given to the State.