The first check stems from public supervisory powers: a characteristic common to all financial systems is the existence of prudential supervision. The second stems from minor shareholders and bank creditors (either holders of ordinary or subordinated debt, or mere depositors), who exert scrutiny in what we know as market discipline. I am sure that these arrangements sound familiar to you: they are the three pillars of the New Capital Accord, or Basel II. But the great worth of Basel II is precisely the acknowledgement that these three levels are part of the structure which, since the very inception of financial systems, has promoted sound banking systems. The three Pillars reflect well-known aspects of the workings of financial and banking systems over many years. And there lies the merit of Basel II. It has been able to identify these three elements and  4  BIS Review 31/2003  to integrate them so as to achieve regulation which is more closely aligned to the management of banks and which, therefore, is more efficient. Let me conclude my remarks by raising the issue of corporate governance and transparency in deposit institutions, including savings banks. One could argue against paying much attention to corporate governance in savings banks, based on the lack of a shareholder structure. I do not agree. First, we should never forget that the issue of corporate governance is related not just to the minority shareholder issue, but also to that of companies raising resources from capital markets.
It is only through operating properly as business concerns, basing their management on professional criteria relating to economic and financial rationale, that savings banks can continue creating value for society and for their regions. Let me turn now for a moment to the Spanish experience. Our “cajas de ahorros” are also very old financial institutions and our story has been a successful one. When I explain the characteristics of the Spanish financial system, and in particular the prominent role of savings banks, some of my foreign counterparts ask about potential problems of fragility and inefficiency and my answer is always the same. Not only are they neither fragile nor inefficient, but they are also as profitable as their banking counterparts, and they are increasing their market share year after year. They are a major contributor to making the Spanish banking sector an efficient and competitive one. I earlier drew a distinction between macro and micro efficiency. Savings banks in Spain have made significant contributions to the macroeconomic efficiency of our system. In bolstering efficiency at firm level, certain factors, which I shall now refer to, should be given particular consideration by savings banks. Any management action geared to cost-rationalisation should pass a careful and thorough cost/benefit analysis so that certain elements of their long-term strategy or their risk profile should not deteriorate. Let me mention a few of these elements. Investment in new technologies Efforts to improve efficiency must be compatible with the challenges posed by new technologies.