This was far from the market consensus and the actual figures, given that the Spanish economy ended 2010 with a growth rate of 0.6%. Further, the haircuts applied to assets were most notable: 28% in the case of housing, 50% in that of uncompleted housing and 62% in that of land prices. In addition, a fall in net operating income of 40% was assumed, one of the most severe for all the countries involved in the exercise. Let me insist on the rigor of our stress testing, as some have broadly criticised the test because some banks from other countries were given a seal of approval only to collapse a few months later. Not only we tested all the banks but the information published by Spanish banks for the stress test was more detailed than that of the other countries. Our aim was to enable analysts and investors to check the stress test for themselves and know what volumes of problem exposures and expected portfolio losses were involved. As a result of the measures mentioned (greater disclosure, amended regulatory framework for savings banks and progress in restructuring), Spanish banks, not only the leading ones  2  BIS central bankers’ speeches  but also a large number of medium-sized banks and savings banks, were once again able to re-fund themselves on international wholesale markets, although the cost of funds continued to reflect the sovereign risk premium.
The first point is how the Fund can improve its surveillance by focusing on how best to reduce the likelihood of crises in emerging markets, in particular, how to help emerging markets better cope with the challenge of the next crisis. The second is our view that the Fund’s surveillance and its works on crisis resolution should recognize the usefulness of national and regional self-insurance efforts that are being pursued by a growing number of countries. And the third is our suggestion that the Fund’s works on crisis prevention and crisis resolution can benefit from a clear separation of these two functions in terms of duties, responsibilities, and decisionmaking, so as to achieve greater effectiveness and accountability. To begin, the consensus seems to be that the Fund has not been doing a good-enough job on crisis prevention and crisis resolution. This is evidenced by a string of financial crises in emerging markets that had happened, which does not reflect well on the Fund’s surveillance mechanism. In addition, dissatisfactions were expressed in the Fund’s perceived lack of consistency and coherence in its approach to crisis resolution, in the shortcomings of its program design and conditionality, and most importantly, in the way political pressure from the major economies were allowed to influence the program content and decisions. In the Thai case, our own experience with IMF involvement was not dissimilar.