EU insurance plan could help Spain recover from financial troubles
The European Union has been struggling to rein in on a dire financial crisis that has threatened the economic stability of several countries in the region. The governing body has turned to the insurance industry to aid in recovery and the mitigation of a future crisis and insurers has, thus far, proven to be a powerful ally in this endeavor. Several countries suffering from the effects of the financial crisis have benefited from the involvement of the insurance industry. Now, the European Union is setting its sights on Spain in the hopes of addressing the country’s economic troubles. If successful, the EU insurance plan could help pull the country back from the brink of financial ruin.
Insurance plan could help with recovery
EU officials are considering providing Spain with insurance for investors who buy the government’s bonds. This is meant to help maintain the country’s access to capital markets and mitigate the taxes European residents pay to the EU, which is largely supporting the financial burdens of the most distressed countries in the union. The initiative is estimated to cost approximately $64 billion and will enable Spain to cover its funding needs and give the European Central Bank the ability to buy Spanish bonds on the secondary market.
EU aims to address issues presented by financial crisis
Spain is currently one of the countries suffering most from the economic crisis in Europe, along with Italy. There is the potential that Spain alone will drain the EU’s bailout fund, leaving no financial support for the other countries that have fallen victim to the crisis. If the insurance plan works as intended, Spain will not drain the bailout fund and the country’s economic troubles would not spread to others in the union.
No decision yet made on insurance plan
The European Union has yet to make a definitive decision regarding the insurance plan. Officials note that it will likely be weeks before the insurance plan can be discussed and a plan of action can be formulated. Insurers have shown their eagerness to participate in the plan, which may help expedite a decision regarding the initiative.