EU explores Spain bank rescue

EurActiv ^ | 07 June 2012 | (EurActiv.com with Reuters)

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European Union officials are urgently exploring ways to rescue Spain's debt-stricken banks, although Madrid has not yet formally requested assistance and is resisting being placed under international supervision, European sources said yesterday (6 June).

Spain, the eurozone's fourth biggest economy, said earlier this week it was effectively losing access to credit markets due to prohibitive borrowing costs and appealed to European partners to help revive its banks.

The European Central Bank dashed investors' hopes of an easing of monetary policy or another flood of cheap liquidity for banks despite saying that the eurozone money market has again become "dysfunctional". The ECB left interest rates on hold at 1% at its monthly meeting.

The move raised pressure on EU political leaders to outline a solution to the bloc's festering debt crisis at a summit later this month, which is being watched closely in the United States and other global powers anxious about a sluggish world economy.

Spanish Economy Minister Luis de Guindos said after talks at the European Commission on there were no immediate plans to apply for a bailout. Spain would await the results of an IMF report and an independent audit of the banking sector, both due this month, before taking decisions on how to recapitalize the banks, he said.

ECB President Mario Draghi said financial markets were not wrong to be worried about the future of the eurozone but they underestimated the political commitment backing the single currency. He welcomed EU leaders' agreement to step up work on a long-term vision for a full economic and monetary union.

"Some of the problems in the euro area have nothing to do with monetary policy," he told a news conference. "I don't think it is right for monetary policy to fill other institutions' lack of action." …

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Same story as what happened to the other countries derogatorily nicknamed after Sus scrofa (by utter racists)—now watch Rajoy’s government fall if he continues to resist the bailout loans with strings of steel attached.