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Spain Calls On Ecb For Record Funding

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Spanish banks called on a record amount of funding from the European Central Bank (ECB) in June amid mounting volatility on financial markets.

They borrowed a total of €126.3bn (£105bn) from the ECB last month, which was a 48pc jump compared with May and the largest amount borrowed according to Bank of Spain records since 1999.

Spain followed Greece into the eurozone debt crisis as concerns over its deficit triggered credit downgrades from ratings agencies and forced the country to agree to tough austerity measures in an attempt to bring the nation's finances back under control.

Spain's banks have relied more heavily on ECB funding as fears about their solvency have made credit on the wholesale financial markets more difficult to come by.

The Spanish Government has insisted it will become clear that its financial institutions are healthy when the results of European bank stress tests are published next week.

So it was a record month for Spanish bank borrowing from the ECB. Will it be beaten next month?

Still I'm sure it's contained and nothing to worry about.

Looks like an ECB lending recovery.

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For all that talk about good news out of Europe, it would be great if there was any "good" news to actually report, instead of just ECB's ongoing monetization of ever more sovereign debt at higher and higher yields, and the Eurozone regulators pretending its insolvent banks are healthy. Case in point - every single overnight funding indicator is now at the worst levels of 2010, including Libor, Interbank Deposit Rates, Repos and Commercial Paper. Nobody is willing to drink the European stability Kool Aid - the entire continent continues to be locked out when it comes to the ever critical ST funding market. As all this debt accumulates and needs to roll, it means the ECB will soon be required to provide not only long-term but short-term funding. In the meantime, the market continues to buy euros from Goldman.

It's contained and stable.

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