Even The News That Spanish Banks Failed The Stress Test Is Good News

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Jamie Coleman at ForexLive makes a good point regarding the rumour that several of the Spanish Cajas (savings banks) may have failed the stress tests.

If they weren’t to fail, it would be a clear signal that the tests were too weak. By receiving a failing grade, the tests get a bit more credibility.

Cajas failure has actually been assumed from very early on, in part because the’re known to be weak (several have merged to form mega-Cajas out of desperation), but also because they’re not so systemically crucial. Thus, they’re the perfect sacrificial lambs: they can fail, signal stress test success, and not cause any huge problems.

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