The President of the European Commission, José Manuel Barrosso and the President of the European Council, Herman Van Rompuy stated in different press releases its confidence on the euro area, specially with regard to the latest developments in the sovereign bond markets of Italy and Spain.

Both presidents, Mr Van Rompuy and Mr Barroso, stressed that the concerns regarding Italy and Spain are clearly unwarranted on the basis of economic and budgetary fundamentals and the steps that these two Member States are already taking to reinforce those fundamentals. The tensions in bond markets reflect a growing concern among investors about the systemic capacity of the euro area to respond to the evolving crisis, according to Mr Barroso.

On 21 of July, the Heads of State and Government of the euro area met in order to reach an agreement to solve the situation in Greece. They reaffirmed their commitment to ensure the financial stability of the euro area. Among the measures, they will support a new programme for Greece, together with the IMF and the voluntary contribution of the private sector. With the new measures, the Council intends to stop the risk of contagion, improving the Greek debt sustainability as well as improving the Eurozone's crisis management. According to Mr Barroso, the necessary technical work to implement the measures agreed on 21 July is already underway and will be completed as a matter of urgency. He also added that the Commission services are actively supporting the Member States in this technical work. Implementation of some of these measures will also require actions by national parliaments and he also will send a letter to the Heads of State and Government urging them to ensure that these actions are taken without delay.

Mr Van Rompuy stated also that the Council want to put an end to speculation about the debt elsewhere in the euro area. He also reminded that for such goal he put two actions in place: first, the involvement of the Private Sector. The Council understand that markets always fear the unilateral modification of the terms of contract, even if this is voluntary as is the case now with private creditors alleviating some of Greece's debt burden. Private Sector Involvement will not be used in other cases. Second, the Council decided to allow the EFSF and the ESM to intervene on a precautionary basis, providing the possibility to draw on the resources if need be in order to prevent healthy euro area economies from being cut off from funding through vagaries in the markets. Mr Vompuy is confidence that where needed national parliaments will approve of these new instruments rapidly.

The President of the Council also stated is astonishment on the increase of cost of borrowing for a number of euro area countries since 21 of July. Although, all macro economic fundamentals point in the opposite direction. According to him, Italy will generate a primary surplus in 2011 and, with the additional austerity package just adopted will have a balanced budget in 2014. Spain has a low debt stock around 70%, below the EU and the Euro area average, and has taken measures to reduce its deficit and boost growth. He underlined that in all these cases, the current market assessment of risks are totally out of line with the fundamentals and it is ludicrous that CDS-rankings put these countries in the top tier of default risk countries.