We must also work to mitigate any effects and try to ensure that crises which do occur are not as extensive and economically costly as those we have experienced in recent years. The objective, in other words, must be to combine the necessary regulation and supervision of the markets with the benefits that a well developed financial system can confer. The regulation and supervision of financial firms are necessary for various reasons. But these functions must be carried out in such a way that they do not throttle the potential that can contribute to greater prosperity in the global economy. Conclusion Many countries have deregulated their financial systems in the past two decades. For the first time since the outbreak of World War One, capital is again more or less free to move across national borders. Moreover, major changes in communications and information technology have provided new methods and instruments for risk management. As a result of all this, today the financial system is more extensive and globalised than ever before. This holds even though capital flows relative to GDP were also large at the turn of the nineteenth century. At the time, however, it was other countries that received the flows, which also took a somewhat different form. The rapid pace of financial developments and internationalisation is really a logical consequence of the globalised production of goods and services, with the strong growth of cross-border trade in the world economy. These developments have accentuated the need of new financial solutions for firms and households.
From the point of view of the Eurosystem, this was a very important attribute, on top of the fact that covered bonds are akin to our traditional repurchase operations. Since the announcement in May there has been a wave of new issuances. As Spanish banks have traditionally been significant issuers of this type of securities, developments in Spain are representative. The issuance volume of Spanish banks between the time of the announcement and the end of October has reached 16 billion euro. It is now around 20% of the total euro area issuance. Spreads have declined in tandem. In Spain they are now more than 100 basis points lower than the level they reached at their peak. Liquidity has returned to the market, with tangible reductions in bid-ask spreads in secondary transactions. We interpret these developments as a confirmation that our purchase programme, although measured in size, has been effective in bringing new life to an important segment of the European financial market. Overall, we are very satisfied with the effectiveness of this programme. II. Lessons: present and future  What lessons can we draw from the financial crisis that has occupied all of us for more the last two years? The crisis has exposed the fundamental fragility of the international financial system. No segment of the market or category of players has been spared. Therefore, we have to re-consider all aspects of finance as a precondition to reform.