Spain has followed the lead of the developed countries, and you should rest assured that CCM will meet all its commitments to depositors and other creditors. Second, the Maastricht Treaty prevents central banks from extending emergency liquidity assistance to an ailing institution, such as CCM, without the appropriate collateral. Given the amounts that might have to be committed, the Spanish Treasury had to provide explicit guarantees to the central bank, so as not to infringe the Treaty’s prohibition on central banks extending "monetary financing" to public Treasuries. *** Having explained the substance of and the reasons behind the urgent replacement of CCM’s directors, allow me to offer greater details on the Banco de España’s past supervisory measures in relation to CCM and its current situation. Before that, however, I should highlight what is a primordial starting point: CCM is a credit institution with a positive net worth. That is to say, and in the vernacular of the press, the institution has no "hole" in its balance sheet. Yet this does not mean it is not facing serious problems, the cause of which must be sought in an inappropriate management of risk and a forceful business expansion – especially in the real estate sector – funded largely through resort to the international bond markets, generating sizable imbalances. Past experience shows that these credit expansion policies are very dangerous if unaccompanied by the related risk control measures since, generally, they usually entail a relaxing of credit standards. Responsibility for these decisions falls on CCM's previous directors.
In view of this delicate situation and since the problem is a pressing one, the Banco de España, with the Government’s agreement, decided it was necessary to provide additional financing to CCM to preserve its stability. To this end, the Government granted backing to the loan, for a maximum amount of € billion, extended by the Banco de España. I would like to underscore this point. As reiterated by the Second Deputy Prime Minister at the press conference following the meeting of the Council of Ministers last Sunday, I should stress that we forecast that approximately € billion of this amount will be used. Nevertheless, our room for manoeuvre will make managing the payments more flexible, without any constraints in respect of the amounts involved. Developments in CCM’s liquidity in the three days it has been under the control of the Banco de España nominees have proven more positive than expected. Given the response by all the government authorities involved, management cooperation, the reaction of the trade unions and understanding on the part of the general public, there have been no queues or panic at branches and there have clearly been fewer withdrawals of deposits than foreseen. Having briefly outlined CCM’s current position, let me move on to the ultimate aim of the Banco de España’s supervisory decisions. While seemingly obvious, the Supervisor’s aims are to protect depositors’ savings and creditors, to avoid market turmoil and to preserve the stability of the financial system as a whole.