If these millions of workers remain unemployed in Spain for any lengthy period the banking system, having served to underpin the economy during the crisis, might turn into an obstacle to achieving economic recovery. These are the issues I believe we should pay greatest attention to at present. But I shall focus today on the changes taking place in the regulation and supervision of the financial system globally. While not so immediate, these changes will ultimately exert effects on the Spanish banking system and we should all prepare for this new regulatory setting. *** Nobody with responsibilities for the financial system will be able to forget 14 November 2008. It was on that day, on a European initiative, that the Washington summit was held. This date will go down in history as the start of a sea change in the style and substance of financial regulation. In terms of style, because the summit marked the beginning of a radical turnaround in the governance of the global financial system with the creation of the enlarged G20 – to which Spain was invited – that would culminate in the transformation of the Financial Stability Forum into the Financial Stability Board (FSB), a “club” of which Spain became a fully fledged member for the first time.
The principle underlying this single supervisory mechanism is that the severity of the crisis in the euro area has largely been due to the vicious circle that developed between banking and sovereign risk. To break this link, we need to have a genuine institutionalised banking union that ensures not only the same supervision throughout the euro area, but also identical rules, an integrated bank crisis resolution mechanism and a common deposit guarantee scheme. We are moving towards the banking and financial union that was missing from monetary union. 3. The Eurosystem is providing valuable support during this period of necessary reforms  It is clear that the ultimate responsibility for exiting the crisis lies with governments, at national level – implementing reforms, consolidating public finances and restoring competitiveness – and at the collective level – agreeing on and implementing a more coherent and comprehensive institutional framework around monetary union. These reforms are obviously – and fortunately – the fruit of a democratic process and can only be that. But  BIS central bankers’ speeches  3  the corollary to this is that these necessary reforms cannot be immediate: they take time, first to be implemented and then to yield their effects. And the time of the markets is not that of democracy, as you know. Doubts and delays create nervousness, volatility and worry in financial markets, which often leads to sharp rises in interest rates for countries deemed to be vulnerable.