Spain’s decision to apply for eurozone assistance to recapitalise its banking system removes one of the key structural weaknesses which has undermined confidence in the euro for many months. Until now, successive Spanish governments have repeatedly claimed that there was no need for eurozone assistance for their banking sector. However, these claims have not carried much credibility since the economy dropped back into recession last year, taking the real estate sector down with it. (See earlier blogs here and here.) The failure of Bankia was the final moment of truth. Read more
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