Tuesday, June 26, 2012

Spain officially asks for bailout

Spain, on Monday, has officially requested for a bailout but hasn't given any details including the actual amount of money requested.

The EU leaders will meet on Thursday to discuss the growing debt crisis. The details of Spanish bailout are expected to be announced after the meeting. The focus of the conference will be on Italy and Spain, considered by many as “too big to fail” but are now being tagged as “too big to bailout”.

Spain’s Economy Minister Luis de Guindos, has said that his country would request an amount that would enable its bank to pull themselves out from the crisis plus some additional funds. European leaders have already offered $125 billion for Spain’s crippling banking sector.

Who will get the money?

The bailout will go directly to the bank recapitalization fund and from there will be distributed among the banks.

The European leaders can also decide to give aid to the country’s banks directly, instead of going through the Spanish government. But Germany thinks otherwise. Several Spanish banks are being criticized for mismanagement of aid and corruption. If the bailout money goes through the Spanish government then it will be answerable to other European leaders for misuse of funds.

Full details of the bailout package will be released before July 9th, when De Guindos is expected to sign the agreement after meeting with European finance ministers. 

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