Reply #17: More on the latest Spanish moves:

[Ghost Dog]

Spain to boost deposit guarantee, create fund
Tue Oct 7, 2008 3:34pm EDT MADRID, Oct 7 (Reuters) - Spain will raise its guarantee for deposits in its banks to 100,000 euros and set up a 30 billion euro fund to buy assets from banks and keep credit flowing to the economy, Prime Minister Jose Luis Rodriguez Zapatero said on Tuesday.

"If there is anywhere Spaniards can know their savings are safe, it's in Spanish banks," Zapatero told a news conference, announcing a guarantee double a minimum agreed at a European finance ministers' meeting in Luxembourg hours earlier.

Spain's banks, which officials say were more conservatively regulated than elsewhere in Europe, have so far been spared the havoc wreaked on banks in the United States or Britain. But the Bank of Spain said on Tuesday that banks could be forced into mergers, and analysts say smaller institutions and savings banks are most exposed to the liquidity drought in financial markets.

Spain's institutions are also exposed to a more traditional type of banking hazard, with homeowners struggling to pay back mortgages as a housing bubble deflates and the economy slows.

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"The government isn't going to buy toxic assets, but healthy assets," he said, adding that Spain's relatively low public debt level made the measure possible.

"The fund will buy assets from financial institutions, in a voluntary manner on their part, using market criteria, Spanish assets of maximum quality, in order to guarantee over a sufficient period of time that financing makes its way to companies and citizens," Zapatero said.

/... http://www.reuters.com/article/marketsNews/idINL736378720081007?rpc=44&sp=true