Jaime Caruana: Reflections on financial information from the standpoint of a banking supervisor Speech by Mr Jaime Caruana, Governor of the Bank of Spain, at the 13th XBRL International Conference, Madrid, 16 May 2006. *  *  *  Introduction Good afternoon. I would like to begin by thanking the organisers of this 13th XBRL International Conference for their kind invitation to participate. I am delighted to have this opportunity to close today’s session by sharing with you some reflections on financial information from the standpoint of a banking supervisor. And it is, of course, a special pleasure for me to be able to address this audience in my home country. I guess that, looking from the outside, it might seem somewhat strange that banking supervisors and other regulators are taking such an active interest in a computer language. But I think that all of us here are very well aware of the role that tools such as XBRL can play in promoting the effective and efficient flow of financial information, and it is on this wider objective that I want to focus my intervention today. I will begin with a brief introduction to recall the important role that information plays in financial markets from a macroeconomic perspective.
BIS Review 78/2000  8  This raises the question of whether to separate production and distribution. Many institutions, particularly smaller ones, may find it beneficial to distribute other companies’ products. Different cooperation agreements make it possible for small players to offer a broader product range than they would have been able to on their own. We have seen several examples of this in Norway, particularly among savings banks. At the same time, some larger institutions may benefit from offering their products for distribution through other institutions. This may contribute to keeping Nordic banks - both large and small - competitive in the retail market. In the segment of large enterprises, however, production and distribution are perhaps more difficult to separate. This may imply that many Nordic banks are too small to compete for the business of large and advanced customers. Competition in this segment is perhaps more international than Nordic. How does cross-border integration change the risk outlook for the financial system? If it improves the long-term profitability, and thus the robustness of institutions, it is clearly advantageous. Spreading production costs over a larger customer base may improve profits. In addition, cross-border competition might lead to efficiency gains and a spillover of best practices. However, there are also counter-arguments. For example, increasing the size of operations may reduce management focus. In general, more integrated financial markets can spread financial unrest between countries more easily. This could have a negative effect on financial stability.