VIENNA (Reuters) - The euro will survive even if Spain were cut off from capital markets, European Central Bank policymaker Ewald Nowotny said, adding the currency was in solid shape despite financial problems in some member countries.
In an interview aired by Austria radio on Saturday, Nowotny also supported the idea of having a limited number of European countries start a financial transactions tax and said there was no alternative to closer European Union economic integration.
Nowotny, also head of Austria's central bank, often says the euro is a smoothly functioning currency despite debt woes at some of the 17 countries that share it.
Euro zone leaders have agreed to provide up to 100 billion euros ($125 billion) to prop up Spain's banking sector, which an audit released on Thursday found would need up to 62 billion extra capital to weather adverse circumstances.
Asked if the euro would survive if Spain itself were frozen out of markets, Nowotny said: "We have to prevent this situation. But even if Spain could not finance itself it would not automatically mean that it would exit the euro. There is no nervousness about the euro itself, just about individual countries".
He took a dig at International Monetary Fund managing director Christine Lagarde for suggesting on Thursday the euro's viability was at stake.
"This is exactly an example of what I see as an inadmissible simplification," he said.
Nowotny said there was no getting around greater EU economic integration if the bloc wanted to avoid splintering and a loss of power that would eventually degrade people's quality of life and freedoms.
He played down the prospects of next week's EU summit coming up with a detailed way forward, and said that in the longer term it made sense to have a more centralized fiscal policy and a sort of EU finance minister.
"I think it is sensible to have someone who, let us assume as a European commissar, is placed to have concrete influence on national budgets", much as the EU competition commissioner can intervene when needed, he said.
He supported the idea of a limited number of European countries pressing ahead with a tax on financial transactions because some countries, such as Britain, will not join in for fear of harming its financial services industry.
"It is senseless to wait a long time for everyone to go along. It is probably reasonable to start at least with a certain group. One country alone cannot do it," he said.
He said the tax should have a simple model that basically freed long-term transactions from the levy and focused on short-term and, thus, more speculative deals.
($1 = 0.7977 euro)
(Reporting by Michael Shields; Editing by Dan Lalor)