In other words, the implementation of reforms and changes in the banking sector after a banking crisis – in respect of business practices, regulation and supervision – has the potential to strengthen the foundations of the banking sector, thereby improving its ability to contribute to sustainable economic growth. Given the limited time that I have, I will focus on some key structural developments in the banking sector that have taken place over the past twenty years and that are described and analysed in several chapters of the book. In addition, I will examine how the regulations introduced by the Bank of Spain during the boom years helped to prevent and mitigate the negative effects of the crisis and, especially, how some of the reforms and structural changes that are currently being considered may substantially reduce the fragilities of the banking sector. If implemented, they will strengthen the banking system and ultimately have positive effects on financial stability and economic growth in Spain. Some reflections on banking developments during the last two decades As I see it, Spain’s banking sector has undergone two fundamental changes since 1990: banking liberalisation and financial innovation. Banking liberalisation has produced a notable increase in competition among institutions and in financial integration. For example, the cajas (savings banks) have started to compete geographically and in different business segments. The increased competition has also led, at different times during these 20 years, to strong competition for bank deposits (e.g. la “guerra del pasivo” at the end of the 80s).
José Manuel González-Páramo: How will historians judge our handling of this crisis? Speech by Mr José Manuel González-Páramo, Member of the Executive Board of the European Central Bank, in the occasion of the presentation of the book titled “Un Siglo de Historia del Sistema Financiero Español”, Bank of Spain, Madrid, 10 June 2011. *  *  *  Ladies and Gentlemen, It is a great pleasure to have the opportunity to speak today at the Bank of Spain about the Spanish financial sector. The book being presented today consists of a distinguished collection of essays providing a wealth of information on Spain’s financial sector over the last century. Not only does it summarise the key data and the main developments, but it also provides deep analyses. It will definitely become the work of reference on the history of the financial sector in this country in the 20th century. Let me then congratulate the contributors and the editors, José Luis Malo de Molina and Pablo Martín Aceña for their excellent work. Reading the book, notably the chapter by Raimundo Poveda, we can draw some interesting parallels between the current crisis and the banking crisis in the late 1970s and early 1980s. In particular, given the current circumstances, the main message I would like to emphasise today is that certain changes in the banking sector that are implemented in response to crises are essential to guarantee a strong, robust banking sector in the future.