debtSpanish President Mariano Rajoy held talks with European Council President Herman Van Rompuy on Tuesday in Madrid. During a press conference following the meeting the Spanish leader stressed the importance of finalizing the construction of the EU banking union by the end of 2012. He also said that Greece's exit from the Eurozone would be a failure for entire Europe.

Van Rompuy praised the determination with which Rajoy's government was introducing reforms and assured that the EU was prepared to grant a bailout for Spanish banks as soon as a formal request was submitted.

When asked about Catalonia's earlier petition for 6 billion euros in regional bailout funds, Rajoy assured that such aid would be provided.

On Thursday Rajoy will hold talks with French President Francois Hollande.

ECB's Draghi won't attend the Jackson Hole symposium

According to an ECB spokesman, the central bank's president Mario Draghi decided to cancel his trip to the economic forum in Jackson Hole, Wyoming, due to a “a very heavy workload.”

Draghi's speech was highly expected by investors who hoped for hints on ECB's bond purchase program. The ECB will hold its monthly monetary policy meeting on September 6.

In the opinion of BBH Global Currency Strategy Team, Draghi's decicion suggests “that euro zone officials are in lock-down mode and trying to come up with another bazooka moment.”

Spain's borrowing costs drop to 3-month low at auction

Spanish borrowing costs decreased significantly at a bond auction held on Tuesday. The country's Treasury sold 3.6 billion euros worth of government bonds, exceeding the target of 3.5 billion euros.

3-month bonds were sold at an average yield of 0.946%, in comparison with 2.434% the country had to pay at the auction last month. 6-month bonds yielded 2.026% versus 3.691% seen at the previous sale.