Although such ground-breaking policy efforts by the Spanish authorities are commendable, the current state of the Spanish banking system seems to underline the difficulty of responding to asset price bubbles solely with macro-prudential tools.
The extent of easing over the past nine months has clearly been significant, although certainly off a high base. Our Projections point to further, but quite small, easings in the first two quarters of 1998 before emerging inflationary pressures lead us to expect monetary conditions to enter another tightening phase.