Spain Initiates Mortgage Fund

  • 16 years ago
  • Uncategorized
The government of Spain has approved the creation of a €30 billion fund to buy mortgage debt from banks in a bid to help stabilize the industry and keep credit flowing. The fund could be extended to €50 billion if necessary, according to the government.
Deputy Prime Minister Maria Teresa Fernandez de la Vega said that “This is a way to re-establish the normal functioning of our financial system, a decisive way to reactivate the economy and encourage the creation of jobs.”
According to the government, the fund will cost taxpayers zero because they will only purchase quality assets and not bad mortgages. Once the markets settle down, the government plans to resell the assets, said the Deputy Prime Minister. “Therefore, the state is going to recover all the money it will have injected into the system,” Fernandez de la Vega said. “It is an investment, not an expenditure.”
In addition to the money to help keep credit flowing, the Spanish government also approved an increase in the guarantee limit for bank deposits from €20,000 to €100,000. This increase is part of a broader European effort to shore up confidence in the banking industry across the continent.
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