Consequently, thanks to the design of a general provision such as the present one, along with a tightening of the parameters that determine  BIS Review 62/2008  5  the specific provision, the Spanish banking system had the highest volume of provisions among the developed countries when the market turbulence emerged. Last lesson: on how the turbulence affects us all I have attempted to convey to you that, in Spain, banking regulation has proven to be strict, having included concern over procyclicality among its criteria for action, and that Spanish banks have properly managed the risks associated with financial developments in recent years. The absence of a subprime segment, of an originate-to-distribute model, of complex structured products and of off-balance sheet investment vehicles attest to the fact we have all done the right things. Can we afford to be complacent? I would say no, for three reasons. First, because if we have not made certain mistakes, this is largely due to the fact that our financial system has been very traditional, without sophisticated institutions such as those that have most suffered from the turbulence. Second, because, as I have already said, the Spanish economy needs to undergo adjustment in several areas, but essentially in that of residential investment. And third, because the strong interconnections within the financial system, which is today more global than ever, mean that if markets cease to function, that has negative consequences not only for those that generate the problems but for all those participating in them.
First, and as already stated, low risk premiums and very low volatility led to a strong increase in leverage on international financial markets and a big appetite for risk in the search for high yields, a tendency in which certain financial institutions in some countries participated. Also, and in relation to the foregoing, the development of a banking model focusing on the origination of loans for their subsequent distribution on the financial markets, underpinned by the securitisation of assets through certain complex structured products and by the use of off-balance sheet investment vehicles, introduced inappropriate incentives as regards the granting of financing and the subsequent management of the associated risks. In my view, it is these latter elements which explain the intensity and speed with which the turbulence has spread. Starting from this idea, I shall draw five lessons which I consider highly relevant for the future. I will then evaluate the Spanish banking system in relation to each of them in order, finally, to identify certain tasks which we should, each from our own area of responsibility, address so as to limit the adverse consequences for the Spanish economy of the international financial market turbulence. First lesson: on the originate-to-distribute model In recent years some banking systems have developed a banking model based on the origination of loans for subsequent distribution on the financial markets. This type of model has been largely underpinned by asset securitisation, a process that enables bank loans to be batched and converted into marketable products.