This contribution analyses the viability of the new Spanish financial landscape which has been drawn by the European authorities and the national administration in order to overcome the progressive deterioration of social wealth in Spain since the beginning of the economic crisis in 2008.
The adoption and the implementation of a new legal framework during the last two years, establishing tougher requirements on capital adequacy, leverage ratios and counter-cyclical and other buffers, as well as the shaping of the Banking Union, are not enough to transform the Spanish banking system into the key tool for the creation of wealth.
There is a paradox of both legal and institutional outcomes. While, on the one hand, some positive changes in the functioning and the structure of the banking industry have been prompted by the regulatory reform, there are, on the other hand, some uncertainties linked to the recapitalisation costs of a relevant group of credit institutions and the persistence of serious structural problems of the Spanish economy.
Moving faster to full banking union will reduce financial market stress in Spain.