The markets want to see the Bank of Spain carry out the cutbacks that it agreed to carry out, and as long as this does not happen it's going to be hard to regain stability. The lack of deposit guarantees explains why Spain's risk premium shot back up to 559 basis points after falling below 500 after the temporary euphoria after the latest summit.
Spain's challenge is to execute current reforms, particularly those in the public sector, whic h will be a hard bone to chew
A long path lies ahead until the health care and financial sectors are cleaned up, and the conditions for Spain's banking sector bailout are still unknown. Rajoy ought to resolve the controversy within his government and prioritize national policy instead of trying to win votes by making promises he does not intend to keep.
