BERLIN/PARIS (Reuters) - The euro zone is at a decisive point and leaders will work with the European Central Bank (ECB) to demonstrate their commitment to the stability of the single currency, Eurogroup head Jean-Claude Juncker said in interviews with European newspapers.
Juncker told Germany's Sueddeutsche Zeitung and France's Le Figaro in reports made available on Sunday that leaders would decide in the next few days what measures to take to tackle Spanish bond yields which last week touched euro-era highs. They had "no time to lose," he said.
Asked whether it was true that France wanted the bailout fund to buy government bonds, under an agreement made by euro zone leaders at their summit in June, but that Germany was resisting, Juncker answered:
"I have no doubt that we will implement the agreements of the last summit. We still need to decide what we will do when. That depends on the developments of the next days."
The European bailout fund, the European Financial Stability Fund (EFSF), will work together with the ECB without affecting its independence, he said.
"We will work in close agreement with the ECB, and we will, as
Draghi said on Thursday he would do whatever was necessary to protect the euro zone from collapse, prompting expectations of a new bond-buying programme.
"The euro countries have reached a point where we have to use all means possible to show that we are determined to protect the stability of the euro zone... nobody should doubt the will of those involved, to prove our determination," Juncker said.
According to media reports, the euro zone rescue fund could buy government bonds on the primary market, flanked by ECB purchases on the secondary market.
Juncker said leaders were determined to keep Greece within the euro zone.
Policymakers are working on "last chance" options to reduce Greece's debts and keep it in the euro zone, with the ECB and national central banks looking at also taking significant losses on the value of their bond holdings, officials said.
German Chancellor Angela Merkel, Italian Prime Minister Mario Monti and French President Francois Hollande have all vowed in the last few days to do everything to protect the euro zone, after a frantic week in which Spanish debt yields soared and euro zone officials acknowledged Greece was way off target in meeting the conditions of its bailout.
(Reporting by Alexandra Hudson in Berlin and Alexandria Sage in Paris, editing by Tim Pearce)
more in Fwire