"There are no (debt) operations between nations in the monetary union and practically the only demand for Italian debt comes from Italians," Luis de Guindos said.

"A similar thing is happening in France and Spain."

The minister added that investors outside the euro zone had no confidence in the euro.

"This renationalization of the capital markets is very negative," he said.

Spain's borrowing costs are likely to stay high on Tuesday when it tests investor appetite for its debt for the first time since announcing more austerity last week, suggesting markets remain unconvinced it can avoid a European bailout.

The euro zone had better fiscal fundamentals than the United States, Britain and Japan, meaning the real problem was an internal one, de Guindos said.

"There is a problem from the point of view of the fundamentals of the monetary union," de Guindos said.

"The decision-making process in the euro zone is slow and complicated. That is where international investors who highlight the weak points attack, at the moment Italy or Spain, at another moment, it will be others."

(Reporting By Sarah Morris; Editing by Myra MacDonald)

• A Permanent Economic Emergency