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International banks used a record Spanish government bonds as collateral to obtain financing in the markets during the last week, suggesting an improvement in confidence in Spain as fears subside as the fourth largest economy in the euro zone could renege on obligations to pay its debt, according to the British newspaper Financial Times. “
In this sense, the short-term loans backed by Spanish bonds on repurchase agreements, the main financing tool in the euro area, amounted to 160,000 million euros last Wednesday, according to the platform Broker Tec intermediation cap.
In particular, the paper points out that most of the entities involved to guarantee Spanish bonds are domestic institutions, which have been the most difficulties have had access to funding.

“Spanish banks are highly dependent on loans from the European Central Bank (ECB) because of fears about the stability of the financial sector,” says the paper.
“This is a very positive sign for Spain to reduce its dependence on loans from the ECB;” said Don Smith, economist at Cap, quoin adds that “also represents an important step in the right direction for the Euro zone.”
In this regard, “Financial Times” says that a big reason behind this increased willingness to accept bonds as collateral Spanish endorsement by LCH.Clearnet and Murex, which offer coverage to any “defaults”.

In particular, LCH.Clearnet, the clearinghouse in London, launched its clearing services for Spanish government bonds and repose on 9 August.
On the other hand, Cava Madrid last month became the first Spanish institution to adhere to EurexRepo, the electronic marketplace related to Murex Clearing, the exchange operator controlled by Germany, Deutsche Bores.

However, Spanish bankers still perceive difficulties in obtaining financing. “There are now more cash for Spanish banks, but is highly selective, short-term and focused on the big names,” said a banker on condition of anonymity, adding, “this is the reason why that banks and try to find new markets.”
Latest figures show that Spanish banks borrowed money from the ECB for a record amount of 140,000 million euros last July.

The European Commission proposed on Wednesday May 26 to create a harmonized network of national funds for all Member States, which could include Spanish guarantee fund to be financed with fees paid the entities themselves. These funds will provide for the orderly liquidation of failed banks in order to prevent taxpayers are to bear the costs and the current financial crisis.

The creation of the bank rate and was claimed last March by the managing director of the International Monetary Fund (IMF), Dominique Strauss-Kahn, to facilitate the management of bankruptcy and avoid instability in the financial system. However, the president of the European Central Bank (ECB), Jean-Claude Troche, called for caution when implementing this new mechanism to not jeopardize the recovery.

The EU executive will argue that Member States adopt a common approach in creating these funds national resolution to avoid distortions of competition and improving crisis management capability transfers

“The goal is to ensure that financial institutions are the first to contribute to the costs of future crises,” said Internal Market Commissioner, Michel Barmier, in a recent speech. “Prevention is less expensive than repair,” he stressed.