June 10th, 2012
Econintersect: The move was agreed to at emergency talks of eurozone finance ministers Saturday night (9 June 2012). But this is not a bailout. This is not a rescue. According to Spain's Economy Minister Luis de Guindos, this is merely a loan, albeit one made under very favorable conditions, much below market terms. And the action will be taken without any micro-management conditions on Spanish government fiscal operations, such have been forced upon Greece, Ireland and Portugal, according to the BBC. The other countries’ rescue packages came with imposition of stringent government spending cuts.
Follow up:According to the BBC, Spain will make a formal request for the action to take place and then an audit of Spanish banks will ensue:
The exact amount that Spain will receive will be decided after the completion of two audits of its banks, due to be completed by the end of the month.
A team comprising staff from the European Commission, the European Central Bank and the International Monetary Fund will head to Madrid to assess the needs of the Spanish banking sector, a Eurogroup spokesman confirmed to the BBC.
Forbes says that the IMF will likely be involved in the deal but that their macroeconomic “help” that usually invokes additional austerity will not be in play.
Editor’s note: Not a rescue and not a bailout? What is it they say about ducks walking and quacking?
- Spanish banks to get up to 100 bn euros in rescue loans (BBC, 9 June 2012)
- Spain – Massive Rescue Agreed at Euro 100 billion - $124 billion (Haydn Shaughnessy, Forbes, 9 June 2012)
- Eurozone agrees to lend Spanish banks up to 100 billion euros (Jan Strupczewski and Julien Toyer, Reuters, 9 June 2012)