Nearly 220 billion euros were withdrawn from Spanish investment funds in the first two quarters of 2012. This record high signals a possible capital exodus. In June alone, which was an especially turbulent month, over 56 billion euros were withdrawn.
Many investors are exchanging their deposits for public debt, because yields on that asset are higher. The length and intensity of the crisis is forcing other people to withdraw from investment accounts for access to needed cash. Also, the process of reducing foreign private sector debt has caused some withdrawals.
Still, what happened in June indicates that doubts about the financial sector recovery incited people to seek refuge in more secure assets. If the European Central Bank announces a convincing plan to buy sovereign debt, then August will have been a step in the right direction.
