The European Union and Germany are considering bailing out Spain in a desperate move.

Officials from the European Commission said the European Stability Mechanism is discussing all possible measures to aid Spain, including providing direct financial support to its troubled banks.

Direct support from the European Stability Mechanism to Spanish banks is considered a possible option to help rescue Spain, since the Spanish government worries that bailout funds from the IMF and EU will lead to a cut of its credit rating in the international financial market and force it to implement harsh self-rescue measures.

The European Stability Mechanism is a permanent rescue funding program that will replace the temporary European Financial Stability Facility and European Financial Stabilization Mechanism in the euro zone from July first.

Working-level EU officials are closely examining whether the envisaged direct support will violate other EU agreements.