The Spanish bank run caused by redenomination risk is over. And Spanish bond yields are now back to around the 5% level today. Apparently, the ECB's monetisation scheme has worked - and without Spain's having entered a Troika program yet too. That tells you how important currency sovereignty is. Let me spell out what's happening here and why with a few thoughts on how things will proceed going forward.
First, on the bank run front, Spain's central bank, the Bank of Spain, reported today that deposits from families and businesses in Spanish banks increased by 16 billion euros in November 2012 (link in Spanish). This was the largest increase in Spanish deposits in two years. So this is a very big deal. If you recall, just this August, Sober Look was highlighting for us that Spanish banks we...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.