As the Spanish football team prepares to prove itself the best in Europe, their country’s economic problem now threatens the unity of Europe’s monetary union. After months of speculation on the state of Spain’s banks, the Spanish government has finally approached the European Union requesting a bail-out.  The request asks for around 100 Billion Euros intended to provide a buffer stock of capital as well as recapitalize the banks. The timing of the request also coincides with the scheduled Euro meet on Thursday 28^th, where major European leaders will be meeting.

Since 2011, Spain has been facing severe economic crisis. Unemployment stands at over 20% and Spanish government is facing problems with their deficit. Last week, borrowing costs for the government reached new highs severely hindering the government’s ability to raise capital. The private sector has been affected by the real-estate collapse leading to a liquidity problem in Spain’s banks. Bank deposits have been falling every month and the capital outflow is at a record high. On Monday Moody’s downgraded 28 Spanish Banks further adding to uncertainty amongst investors and depositors.

Although there is no consensus about a Euro break-apart, banks and investors have been preparing for the scenario. Being the 4^th largest economy in Europe, the Spanish crisis is much more detrimental to Europe’s stability. It is unlikely that Span’s request for a bailout will be denied. However, it is left to be seen if the bailout will be conditional, such as the one Greece received. In the few weeks to come, investor sentiments will be crucial to the market. If the Euro Zone meeting on Thursday 29^th is unable to come up with a concrete plan, it will surely depress markets and might have an effect on commodity markets.