Speeding up the Pace in Spain

August 16, 2012

In a twist of events, Spain will be moving up its 100 billion euro bailout in an effort to get ahead of new regulations set down by the European Central Bank (ECB). The ECB has now imposed restrictions on bank borrowing, which stands to affect how much the ECB will lend against government-guaranteed bonds.

While the move by the ECB is meant to reduce the risk the 17-country financial zone will be taking in the future, it means that Spain will have to ditch its plan for  nationalized lender Bankia group to receive the ECB’s bailout. As a result, Spain will be forced to find a new lending group to funnel its bailout through to credit and debt-strapped banks in the country.

So far this year, the country’s bonds have also fallen from their July 25 high of 7.75 percent to a weaker 6.68 percent return. One thing is certain though: As this situation unfolds, the possibility of complications increases with new regulation and restrictions from the ECB.  But, with the northern section of the Euro zone paying for the bailouts as the area attempts to recover from its debt crisis, restrictions on where the money goes are likely to be added.

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