Ernst & Young: Liability Of Spain's €100 Billion Banks Bailout Must Be Transferred To ESM
Eurozone policymakers need to do more to deliver a lasting solution to Spain's crisis in 2013 and the first step towards that direction is to allow the Spanish government to transfer the liability of its $100 billion bailout loan for bank recapitalization to the ESM, says Ernst & Young.
"It now appears that the Spanish Government could remain liable for these loans, rather than the ESM being used to recapitalize Spain’s banks directly. This only became apparent last October, when some Eurozone governments stated that existing aid programs cannot be transformed retroactively into a direct ESM bank-aid scheme," EY clarifies.
"If the Government remains liable for the EU loan made to recapitalize the country’s banks, then investors will continue to doubt the underlying solvency of the state’s finances," EY warns.