All indicators suggest that the Spanish financial market reforms have had a remarkable impact on restoring credibility and confidence in the banking sector. As an overview, interest rates have converged towards those of Germany, banks have recapitalized in order to pass European Union stress test benchmarks, and the banking sector is on its way to being cleaned up. Yet, Spanish banks are still holding a lot of bad assets on their balance sheets for fear of taking losses and the entire Spanish economy is in the process of deleveraging.