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66 billion euros GONE: Spanish sending record funds to other countries in record amounts
By Catholic Online (NEWS CONSORTIUM)
June 1st, 2012
Catholic Online (www.catholic.org)
June 1st, 2012
Catholic Online (www.catholic.org)
Sunny Spain is next in line for economic restructuring in the current
chaos sweeping the European Union. As evidence, many Spaniards are
frantically hoarding funds into countries with stronger economies at the
fastest rate since records began. Adding to the bleak outlook was that
the credit ratings of eight regions were cut.
Bank of Spain data showed a net €66.2 billion (£55.2 billion), the most since records began in 1990. The figure compares to a €5.4 billion net entry of funds during the same month a year ago.
Stung by their exposure to a 2008 property crash, Spaniards are worried about the health of their banks. In the scramble many have been sending money to deposit accounts in stronger economies of northern Europe.
The European Central Bank had earlier stepped up pressure for a joint guarantee for bank deposits across the eurozone, saying Europe needed new tools to fight bank runs as the bloc's debt crisis drives investors to flee risk.
Thurs Spain's center-right government has contracted independent auditors to assess the health of its financial system in an effort to restore faith in its banks.
A spokesman for the EU executive arm says that Spain must lay out its restructuring plans for Bankia to the European Commission. The spokesman also said that a domestic solution to the country's bank crisis would be better than a European rescue.
The Spanish government declared this week it would finance a €23.5 billion rescue of the bank through the bank fund, FROB but senior debt bankers said that the syndicated bond market is currently closed for Spanish agencies.
The prospect that Spain might not be able to handle losses at its banks has drastically affected shares and the euro. Both did regain some stability this week.
"What we need first of all is for the Spanish government to tell us its restructuring plans for Bankia, what options it is considering," European Commission spokesman Amadeu Altafaj told radio journalists.
"From there, we will study the plans and see whether they comply with requirements for public aid."
Spain should carry out the refinancing of its banking sector, laid low by a decade of unsustainable lending during a property boom, by market mechanisms or government funds, rather than a European rescue which would have negative connotations, Altafaj said.
"The sooner uncertainties are removed the better," he added.
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.