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.
The market for information and statistics There are market based statistics-producers in developed countries. The market agents are ready to pay a price in order to acquire such statistics. The producers of statistics conduct frequent market surveys, analyse results, supply them on line at a price and help market agents to create wealth. Unfortunately, in Sri Lanka, we do not have such market based statistics-producers. The collection and analysis of vital data that are useful to market agents are being done by a few governmental organisations. Like any other product supplied by the government, such data are also supplied as a public good free of charge. Even when the governmental agencies could sell statistics at a price, they do not venture to do so, because they are guided by such principles as “doing utmost benefit” to people as a social service. The country too, therefore, expects free goods from these governmental organisations. But this creates a problem known as “the agent-principal problem” in economics. The agent-principal problem The agent-principal problem is typical to any government service. It says that the agent who is a government bureau or a department or even a university does not have incentive to produce its output at its best. The principal who is the user of the service, on the other hand, is scattered and not in a position to influence the agent to improve quality.