It appears that Germany is genuinely considering the proposal to allow Spain’s bank rescue fund to receive funds from the EFSF/ESM which can then be used to recapitalise Spain’s ailing banks. Although opposed to Spanish banks obtaining direct access to Europe’s bailout funds, Germany might permit the FROB to receive cash which can then be redistributed to those banks that require recapitalisation. Berlin is awaiting the outcome of Spanish bank audits (due before the end of the month) and next Monday’s IMF report on the sector to gain a perspective on how deep the hole really is before deciding.
No doubt Germany’s thawing on this prickly issue has contributed to the improvement in risk appetite apparent in the last couple of days.
