Monti says European rescue funds may be used for state debt Mechanisms to 'reward virtue' being considered

(ANSA) - Rome, June 20 - Premier Mario Monti has said it may be possible for countries like Italy and Spain to use European Union rescue funds to service their State debts at costs lower than those offered by the money markets.Italy has seen its borrowing costs rise in recent months despite taking austerity measures to put its public finances in order and introducing structural economic reforms because of fears of contagion from other countries embroiled in the eurozone debt crisis. "We are reflecting on how to reinforce the stability of the eurozone via mechanisms that make it possible to reward virtue so that countries respecting the financial rules, like Italy, can have this recognised in terms of less abnormal spread levels," Monti said at the end of the G20 summit in Mexico.He added that the prospect of using the European Financial Stability Facility (EFSF) to buy State debt would be discussed at a meeting of the leaders of Italy, Germany, France and Spain that will take place in Rome on June 22 ahead of a European Council summit on the crisis in Brussels on June 28-29. "Italy has presented an idea that deserves to be considered," said French President Francois Hollande. "We'll talk about it in Rome". Monti, who took the helm of an emergency government of non-political technocrats after Silvio Berlusconi resigned as premier in November, stressed that using rescue funds in this way should not be confused with the idea that Italy was seeking a bailout.The eurozone debt crisis has forced Greece, Ireland and Portugal to seek international bailouts and earlier this month the European Union agreed to lend Spain up to 100 billion euros to support its struggling banks. There has been speculation that Italy, which has a massive State debt, could need international aid too, but this has been dismissed by the EU, the Italian government and rating agencies."The issue of a bailout for Italy is not being raised at all," Monti said. "For Spain it's limited to banks".