Euro zone finance ministers agreed on the allocation of financial assistance to Spain in the amount of 30 billion euros to rescue the banking system affected by the debt crisis.
An emergency meeting in Brussels lasted nine hours. By the end of it ministers reported that Madrid will be able to get the money by the end of July. In addition, Spain may be granted an extension to clean up public finances.
Under existing arrangements, Madrid must cut the maximum budget deficit to 3% in 2013. This period may be extended for another year. Spain is experiencing an outflow of capital caused by the fears of investors about the fact that banks can fail or exit of Greece from the euro zone would bring down the Euro.
Some analysts have expressed fears that the crisis in the banking system in Spain makes the country's authorities to ask their partners for the EU a full financial support at the state level.
Earlier, addressing a formal request for financial assistance, the country's economy minister pointed out that the needs of Spanish banks to create an additional financial buffer are up to 100 billion Euros.
On Monday, the eve of a meeting in Brussels, drastically increased the interest rates on Spanish bonds, as many investors believe that the ministers will fail to agree on specific actions.
"The concrete banks will have specific conditions, and overall supervision of the financial sector will be strengthened," said the head of the Eurogroup Jean-Claude Juncker.
"We are convinced that such a selective approach will be successful in addressing the remaining weaknesses in the Spanish banking sector." he added
