Salar posted on June 11, 2012 06:21
As recent reports suggest, Spain was looking out for an immediate bailout of funds from the euro-zone.
While member nations of the G7 summit have welcomed the Iberian country’s fiscal decision, the European Central Bank (ECB) dashed hopes of further supporting the euro-zone banks and financial institutions.
With foremost parts of the European markets still up by a certain 2%, key analysts await the concerned forces for a favorable decision. Spain banks are in need of £30 billion to be pumped in.
The Spanish economic crisis is of deep concern in the minds of the ECB and therefore, Mario Draghi, president of the monetary body has put forth a suggestion that introducing funds into the banks by means of long-term debts was not the only solution. Moreover, Mario pointed out the burden on the Spanish government.
He clarified, “The issue now is whether these (long-term loans) would actually be effective. Some of these problems in the euro area have nothing to do with the monetary policy... and I don’t think it would be right for monetary policy to fill other institutions’ lack of action.”
The European catastrophe is nothing none is unaware of – Greece was one of the country’s to experience the set-back. Portugal and Ireland fall in the line as well with resorting to international bailouts. Likewise, cost of borrowing in Spain has risen to that of Greece. The fiscal superpowers had suggested that the ECB would once again resume its program of lending discounted long-term loans and costs that will prove beneficial to the nations.
The European Central Bank has already lent €1 trillion – approximately £800 billion to the banking institutions to facelift the operations – according to the half-yearly reports.
On the other hand, the Spanish finance minister has expressed that the credit-markets were “effectively shut” to Spain, which has left many fretful as the country would be left with no other choice but seek help outside.
In order to get back on track, Spanish banks that are still trying their best – should at least be injected with 80 billion Euros. Bonds worth 2 billion Euros are to be put up for auction.
According to Downing Street, US president Barack Obama and Prime Minister David Cameron – both mutually agreed on the need for having “an immediate plan” to decide on the euro-zone predicament. The resolution came in after the telephone talk between the two leaders, right before the G20 summit that will be held this June in Mexico. The meet will have the world leaders decide upon the problems.
In the mean time, Government has chalked out various plans to protect the interest of the taxpayers and to avoid bank bailouts in the years to come.