Dynamic provisioning system was put in place in Spain by its Central Bank, Bank of Spain in July 2000 to cope with a sharp increase in credit risk on Spanish banks’ balance sheets following a period of significant credit growth during the late 1990s. Intense competition among banks had resulted in inadequate loan pricing.
The Securities Markets Programme strictly aims at correcting malfunctioning of markets. The prohibition of monetary financing underlines precisely the fact that budgetary discipline is of the utmost importance.