Monday, June 14, 2010

Under Attack, Spain Acknowledges Credit Squeeze

According to a Reuters report today, Spain officially acknowledged the liquidity freeze on some Spanish banks in the interbank market. Its Treasury general said the government was working to restore confidence through budget cuts and structural economic reforms.

"It's definitely a problem," Mr. Ocana said when asked about the reported credit squeeze. He also said Madrid was not negotiating any financial aid package: "Spain does not need additional financing from any international institution. The rumor is false and I deny it,".

Spain needs to refinance 16.2B euros of bonds in July. The premiums it pays to borrow have been rising. The liquidity freeze was affecting savings banks and small banks.

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