Despite the scaremongering, market observers say Italy and Spain can still avoid having to ask for external aid. Meanwhile, in case they find themselves in conditions similar to those of Portugal, Deutsche Bank has already made an estimate of the amount of the damage. The bank estimates that the aid packages for the two Mediterranean countries would cost 788 billion euros (300 billion for Spain and 488 billion for Italy). But the European Financial Stability Facility (EFF) could not move more than 400 billion euros.
Still, arithmetic is deceiving. If from the numbers it seems that the EFSF does not have sufficient funds to cover the needs of Spain and Italy in case they can no longer access the market, Deutsche Bank believes that the Fund would find the solution for the two countries. This is because they could be helped with different forms.
In Spain, where the problem is the financial sector, the European Union could invest 75 billion euros to recapitalize the sector. According to the bank, this would save 225 billion euros and would be enough to relieve pressure on Madrid.
As for Italy, the bank's economists believe that if necessary, instead of making a three-year programme, the EFSF could buy debt on the secondary market. Timed right, some believe this measure would be efficient and save the EU money.
Source: economic.pt
