European Central Bank policymakers gave the thumbs-up on Tuesday to the euro zone's rescue package for Greece as the debt-laden country passed a key test of its ability to raise fresh funds.
ECB Governing Council members Ewald Nowotny and Miguel Angel Fernandez Ordonez welcomed the 30 billion euro ($40 billion) fallback plan agreed by euro zone finance ministers over the weekend.
Nowotny, who heads the Austrian central bank, said it was up to Greece to decide the activation of the loan package but the agreement sent a signal that policymakers would not be told what to do by speculators.
Greece will go to the markets with debt issues in the near future. One will see how that develops. But Greece is now in a stronger position because we have built up a back-stop position, Nowotny told reporters.
Spain's Ordonez called it necessary and positive, comments that echoed backing from ECB President Jean-Claude Trichet on Monday.
Together with at least 10 billion euros expected from the International Monetary Fund in the first year, it could add up to the biggest multilateral financial rescue ever attempted.
Markets also welcomed the plan. Greece's Public Debt Management Agency raised a larger than expected 1.56 billion euros in a sale of T-bills on Tuesday, passing its first borrowing test since details of the safety net were announced.
The Greek/German 10-year government bond yield spread reached a session low of 356 basis points, about 5 basis points tighter on the day.
HELPING GREECE TO HELP ITSELF
Nowotny said Greece still had to implement agreed budget reforms energetically and decisively and should use the extra room it had gained for structural reforms.
The aid program is not a gift, it is a loan. It is helping Greece to help itself, he said.
The program of the euro zone states and the IMF is also a potent sign that the community of nations does not allow itself to be driven by excessive speculation.
The ECB had also made it clear that ratings agencies had limited power to decide the fate of euro zone countries with its decision last week to extend the lower threshold for debt accepted as security in lending operations.
(Additional reporting by Sylvia Westall; Writing by Krista Hughes and Marc Jones; editing by Mike Peacock)