Large Risks for the Spanish Economy
The IMF revealed that the bad bank will purchase and offload assets at prices which have the potential to become a reference value for the rest of the market, considering the low turnover in Spain’s real estate industry. Spain will be aided by the European Commission to seal another thirty billion Euros so that its banks can strengthen their system against massive risks, if the economy doesn’t succeed in showing a projected recovery in a couple of years’ time. In July 2012, Spain sealed a deal that would help it receive around hundred billion Euros from Europe so as to boost its banks.
If Spain’s banking systems deleveraging is pushed through too quickly by officials, it is feared that ithe country's entire economy may fall into a bigger and deeper financial pothole, thereby drawing the credit out of the nation. The report said that the various conditions listed above have the potential to prove harsher than anticipated, leading Spain to a spiteful circle of reduced growth, damaged confidence, tighter credits, fiscal overruns and higher rates of interest.