Faced with strong external demand for AAA-rated assets, the financial system got creative.

ECONOMIST: Global economic imbalances

On May 21st the government appointed two external valuers to scrutinise the banks' assets.

ECONOMIST: Spain is home to some of Europe��s most vulnerable banks

However, most global trade, Asia's external debt, foreign-exchange liquidity and financial assets are still denominated in dollars.

ECONOMIST: The dollar's dive

The FROB had ordered external valuations, which found that their liabilities far exceeded their assets.

WSJ: Spain Brings the Pain to Bank Investors