Spain has a saying: “A mal tiempo, buena cara” – In bad times, a face held high.

And that is exactly what happened yesterday. After months of taking a battering in the press, Spain’s government spoke up to allay concerns about Spain tapping into Europe’s crisis fund to bail out its banks. Luis de Guindos said no decision would be made until audits of the banks were completed, possibly by the end of June.

He was speaking in Brussels, where proposals aiming to avoid future taxpayer-funded bailouts of banks have been published. The Spanish economy minister told reporters that the issue was not even discussed during the meeting. “We are not preparing anything... we have a road-map,” he said when asked if Spain was seeking a bailout.

His approach worked as the comments helped lift shares in Spain’s leading companies by about 3% in morning trading on the Madrid stock exchange. But all is not well. It has happened every time, so far. Greece tried to soldier on and it eventually got sucked into the mire. It is now a ‘slave’ to Europe, because of the conditions it had agreed to stick by (and largely failed to do so) because of the bailouts it had to take.

Ireland and Portugal also tried to recover, but they too were sucked in and had to seek help. It certainly seems a possibility that Spain – the fourth largest economy in the eurozone – might end up in the same boat, eventually.

Speculation remains that Spain’s bank sector is too weak to escape an eventual bailout, and it seems that while the whole economy is not about to collapse, a partial bailout will be needed.

Spain is trying to find more than €80 billion for its banks, but it cannot borrow on the commercial market. On Tuesday, Spain’s finance minister Cristobal Montoro said the credit markets were “effectively shut” to his country. This means that commercial markets are not prepared to offer loans that are feasible in terms of interest rates. The biggest test, to see whether that may happen, takes place today, with Spain due to auction up to €2 billion in bonds. Another worry for Spain was a proposal put forward by the European Commission yesterday, designed to stop taxpayers’ money being used to bail out failed banks.

However, new legislation is unlikely to come into force before 2014 at the earliest, too late to protect taxpayers from any further immediate bank failures.

There would be new requirements for countries to prepare for a bank collapse, collecting money through an annual ‘tax’ on banks that would be used to provide emergency loans or guarantees.

This move will displease those banks who have been prudent – including Malta’s, but it is the only way to go. This crisis is not a one off. If we look at the Western Capitalist system, it has gone through a series of crests and troughs over since the turn of the century. What one might experience today, is not what it might experience the next time round. These rules need to be watertight and capable of withstanding the test of time, rather than having half baked amendments every few years.