Amid increasing international pressure for Spain to accept a national bailout to rescue its failing banks, Spanish Prime Minister Mariano Rajoy pleaded for direct eurozone rescue, to avoid the humiliation attached to requesting a national bailout, said the Guardian.
According to CNN, the country is "suffering from soaring borrowing costs, a banking system leaking cash and unemployment rates at devastating levels," and the major fear is that if such a large economy fails, it will cause repercussions for Europe and the world.
Spain is calling for the eurozone to centralize its budget and tax policies and a strategy to pool responsibility for failing banks, said the Guardian. The Spanish government believes that its economy is too big to rescue and called for major European reform in order to save the euro. The Guardian suggested that that would entail the Brussels summit at the end of the month establishing a eurozone banking and fiscal union.
More on GlobalPost: Spain’s economic pain, explained
Current rules in the eurozone say that a government has to request help and the money can only be moved via governments. Analysts believe that if Spain is forced to request a bailout from the EU/IMF, it will likely come around June 20, said the Guardian.
An IMF report to be released on Monday will likely show that Spanish banks need an injection of at least 40 billion euros ($50 billion), according to Reuters. A larger influx of 90 billion euros would be needed to clean up the entire Spanish banking sector, according to sources in the financial sector.
Government sources have not confirmed the figures and cautioned that the IMF may not have finalized its estimates, said Reuters.
More on GlobalPost: Moody's downgrades banks in Germany, Austria
Swedish Finance Minister Anders Borg told Reuters, "What they need to do is to ensure that they have sufficient capital of their banks so that they do not pose a concern for all of Europe."
The Spanish banks were weakened by a property sector collapse in 2008, and Bankia, the largest Spanish bank, was recently nationalized, according to Agence France Presse. It is asking for a total of 23.47 billion euros from the state.
Spain wants to avoid an all-out bailout like those given to Ireland, Portugal and Greece, instead seeking aid directed only at its banks, said the AFP.
The Spanish treasury raised 2.07 billion euros ($2.6 billion) in an auction of two-, four- and ten-year bonds, but at a high cost, with the ten-year bonds fetching more than 6.0 percent, a rate viewed as unsustainable, said the AFP.
More on GlobalPost: When the BRICs crumble