What policies, if any, should Europe implement to address Spains Essay

What policies, if any, should Europe implement to address Spains economic problems of declining prices and high unemployment - Essay Example ies include provision of financial assistance to Spain and its banks, substantial economic reforms, improve liquidity in the Euro zone banking system and initiate reforms on economic governance (Lee, 1). As a point of departure, the economic crisis in Spain going down to the rates of inflation and unemployment need immediate response to help the situation. The euro zone should release financial assistance from the it’s lending facility called the European Financial Stability Facility (EFSF) to Spain and its banks to rescue the nation’s financial base from further sliding prices. This facility provides loans in a direct manner to the euro zone governments (Patrick, Cohn-Bendit, and Griffiths, 38). The money is meant for recapitalization and purchase of government bonds primarily on the secondary markets. With the purchase of government bonds through the commercial banks of Spain, the situation is expected to slowly come to normal due to the ability of the government to pay for its spending, particularly the capital expenditure intended for national development. Equally, the European Union should seek that the Spanish government reaches and adheres to the set fiscal asceticism and structural reforms benchmarks. It is realizable that, the European Commission, the European Central Bank, and the IMF help most of the euro zone nations to create and monitor implementation of sound reform programs. This process reassures a stable market for the euro zone goods and services and attracts rescue funds from the EFSF (Patrick, Cohn-Bendit, and Griffiths, 45). In addition, the reformed structures help in faster comeback from an economic downturn. For this case Spain stands a better chance of receiving these funds, because of its early adoption of the reforms assures a stable market free of volatility. The other rescue response involves the unprecedented steps intended to improve the liquidity status of the Euro zone banking structure. For instance from May 2010, the ECB