For Spain, The Beginning Of The End Arrives As Bank Of Spain Starts Using ELA

For Spain, The Beginning Of The End Arrives As Bank Of Spain Starts Using ELA

Submitted by Tyler Durden on 09/05/2012 - 08:34 Greece Ireland Monetary Policy Portugal Reality As we described in detail yesterday, things are going from worse to worserer as the problems in Spain - more specifically in its banking sector - are deepening as deposit flight accelerates, and "the private sector is leaving the banking system." But the Bank of Spain isn't leaving anything to chance. The WSJ disconcertingly highlights that last month the central bank appears for the first time to have activated an emergency lending program that will enable its banks to borrow from the Bank of Spain directly, bypassing the ECB's relatively tough collateral demands. That would make Spain at least the fourth euro-zone country - following Greece, Ireland and Portugal - to use the ELA, which generally is reserved for situations when banks have exhausted all other financing options. As we pointed out yesterday, this would appear to confirm a "full-blown bailout" is imminent, as the collateral problems mount.