Here a particular effort should be made to explain all the decisions adopted by the different levels of government in Spain that have been well-received and valued by the markets, such as structural reforms, pension reform and the recent Organic Law on Budgetary Stability, among others. There should likewise be a common effort, in the interest of all sectors of the Spanish economy, to disseminate and address in depth the additional measures that should shortly be adopted to tackle the crisis. There is no more important or pressing task in the short term than to restore lost confidence. And here, collaboration is called for by politicians and economic and social agents in positions of responsibility, and by all institutions with economic policymaking responsibilities. BIS central bankers’ speeches  5  A fundamental determinant of confidence is the credibility of regulatory and supervisory institutions, based on their ability to exercise their powers professionally and independently. This is always an essential element of a country’s economic reputation, but all the more so when confidence has been called into question and the recovery in growth depends on the external financing of its economy. Adam Smith observed in his famous work that the wealth of nations was then closely related to how open their trade was. And today we can see how the richest and most democratically sound countries in the world are those that have competent and independent regulatory and supervisory agencies that act as a counterweight to governments potentially succumbing to interventionist temptations.
Following the approval of the RDL, the banks and the authorities focused on ensuring compliance with this legislation, and on pursuing bank integration processes and on implementing the business model changes arising from the amended regulations governing savings banks. Under the provisions of the RDL, 13 banks had to increase their capital by more than € billion, meaning that in the second stress test conducted by the European Banking Authority, further capital increases were not needed. However, as the crisis worsened and spread in summer 2011, the Community authorities demanded a temporary increase in the capital requirements of large banks and the creation of a temporary extraordinary buffer associated with potential sovereign debt portfolio losses. These new requirements were applied to the five largest Spanish banks, for which additional capital needs of somewhat over € billion were calculated. 4  BIS central bankers’ speeches  As a result of all these developments, there was significant progress in the clean-up and restructuring of the Spanish banking system. From the onset of the crisis to the beginning of this year, provisions of around 13% of GDP were set aside, banks shored up their solvency by significantly increasing their capital, most savings banks converted into banks and around 30 institutions disappeared, with their management passing in most cases to other sounder and more efficient banks.