Euro Gains After Spanish Regional Elections Mitigated by Uncertainty Over Bailout

The euro held at 1.3055 on Monday morning as Spanish Prime Minister Mariano Rajoy won the majority of the vote in regional elections held in Galicia, his home region. The win served a stepping stone as he continues to make spending cuts and push austerity measures. Many believed that his severe cuts would not be accepted elsewhere had he lost the region. News of the vote supported the euro only slightly, helping it climb back from previous losses that resulted after the Thursday and Friday's two day meeting of European leaders to discuss the banking situation. Since the summit's main focus was long term changes to the region's banking system, most of the decisions did not have immediate impact on the common currency. However, Reuters reported on Monday that Rajoy told reporters that he was still unsure of whether or not to ask for aid. The statement put pressure on the euro, as many are hoping Spain will ask for aid soon, so the European Central Bank can start buying Spanish bonds and alleviating some of the debt. At the close of the meeting, leaders came to an agreement to implement a banking structure where all banks are governed under one central leader, the European Central Bank. This decision, although unpopular in Germany, is good for Spain as the new structure means the ECB can inject funds directly into struggling Spanish banks. The legal framework is said to be in place by January 1, 2013, but many believe that such a large scale restructuring will take months to implement and that it will be up and running later in the year.