Germany’s finance minister admitted for the first time yesterday that Greece would need a third aid package, as a source in Athens said the sums involved in any new deal would be far smaller than previous rescues.

The European Central Bank may raise rates if inflation pressure increases, even after it pledged to keep borrowing costs low, according to Germany’s Bundesbank.

The ECB has not ruled out cutting interest rates further than their historical low of 0.5% in a move that could see Irish banks lose even more money on their tracker mortgage books.

ECB president Mario Draghi has said the bank is considering buying asset-backed securities among possible options to support lending to SMEs.

People with Cyprus bank accounts will lose up to 10% of their savings as the price of a €10bn rescue package for the cash-strapped country from its European partners and the International Monetary Fund.

ECB policymaker Joerg Asmussen has said Greece will probably need a follow- up programme for the years following 2014 after the eurozone, this week agrees on the country’s funding for the next couple of years.

Germany’s finance ministry is considering a debt buyback as a possible way of reducing Greece’s huge debt pile, which threatens to rise well above a target level of 120% of GDP by 2020, according to German news magazine Spiegel.

The European Central Bank said the cost of its new Frankfurt headquarters will jump by as much as 41% due to higher prices for construction materials and “a number of unforeseen challenges.”

Irish authorities now favour using government bonds to refinance the rescue of the former Anglo Irish Bank, easing funding pressure on the State over the next decade, according to sources.

Spain will consider seeking extra aid from Europe on top of a €100bn rescue of its financial sector but does not see any need for new conditions, said prime minister Mariano Rajoy.

German central bank chief Jens Weidmann’s reported threat to resign has piled pressure on ECB president Mario Draghi to mollify opposition to a new bond-buying plan without tying it up in so many knots it is rendered ineffective.

Greece’s new government will present “alarming” data on its recession and unemployment to international debt inspectors this week in a bid to renegotiate the terms of its bailout agreements, a spokesman said.

Cyprus won support from its eurozone partners last night for emergency funding to prop up its banks, crippled by their Greek debt holdings.

The margin of Thursday’s endorsement of the EU fiscal treaty may have been greater than anticipated.

Just as the news coming from Athens augured a little better for the future of the eurozone, the word from Madrid plunged the future of the embattled currency back into doubt.

EUROPEAN Central Bank President Mario Draghi agreed to put Belgium’s Peter Praet in charge of the bank’s economics division, ignoring calls from Germany that one of its nationals should keep the job.

THE resignation of the top German official at the European Central Bank couldn’t have come at a worse time for eurozone policymakers as they search for a way out of the deepest crisis in the currency’s 12-year history.