There are some favourable aspects to the new rules, but they raise doubts as to the Pact’s capacity to deliver the budgetary discipline that proper functioning of the Monetary Union requires. Regardless of the fact that a full assessment of the agreement reached can only be made once the related legal texts are known, it is imperative, to dispel the uncertainty the reform process has aroused, that the European authorities should now apply the revised rules unequivocally and strictly. The European Council also revised the so-called Lisbon Agenda, with which it was hoped to reinvigorate the European economy in the first decade of the new millennium. Assessment of the results achieved at the half-way stage makes disappointing reading. The introduction of reforms has been insufficient and the European co-ordination mechanisms have proven too weak to encourage the adoption of the appropriate measures at the national level. The Council has sought to re-launch this strategy, focusing on growth and employment, and altering the co-ordination arrangements between the Council, the Member States and the Commission, so as to ease the way for the adoption and monitoring of reforms at the national level. This new direction is appropriate, although more specific measures giving a more determined political impulse to the process would have been desirable. Such determination will be needed, in particular, to overcome the obstacles hindering completion of the single market. Indeed, these were manifest in the European Council’s request that the Commission revise its draft directive on liberalising the provision of services in the Union.
of active scrutiny of the market, of shareholders and of creditors, which implies a continual strengthening of transparency. It is this latter aspect, relating to Pillar III, which is the least well-known, although it is that with the greatest potential in the medium term for disseminating best practices in risk management. Of course, the completion of Basel II is only the beginning of the implementation process, and not just in credit institutions, but also in their supervisors. In this respect, I believe that our institutions and our supervisory model are in a magnificent position to lead the implementation process insofar as quality is concerned. And this process will yield better managed institutions and more effective supervision. These two key regulatory issues raise other points. First, the development of IAS and Basel II make it necessary to strengthen international co-operation in supervision and regulation. The international expansion of Spanish banking and its presence in a larger number of jurisdictions with differing features raise the need to establish closer bilateral relations with the authorities of other countries, so as better to comply with the respective responsibilities. In addition, the new European legislation on financial conglomerates also addresses in depth the need for greater co-operation. Specifically, the EU has opted for a solution based on co-operation between supervisors as the most appropriate (and essential) approach.