Notwithstanding this, and as a natural consequence of credit growth in the past, and of a macroeconomic setting characterised by a cyclical turning point, we should expect continuing rises in bad debts in the coming months. This rise in bad debts should concern us, and indeed it would be alarming if bank regulators and supervisors were unconcerned; but it does so only moderately, bearing in mind the resilience of the banking sector according to the stress tests performed by the Banco de España under assumptions in which extremely adverse scenarios materialise. Nor will I be referring today to the problems that are common to all adjustment processes, the adjustment in the Spanish economy having moreover begun before the turbulence emerged last summer. Rather, I shall be focusing on what for me is the worst effect of this turbulence: the global financial market dysfunctions. So you may better understand my subsequent remarks, I would like to very briefly outline how, starting from a very limited  BIS Review 62/2008  1  segment of the US mortgage market (the subprime mortgage segment), we have reached a generalised situation of international financial market turbulence. The factors behind the current situation are complex. But in my opinion there are two key elements that explain such an intense process of propagation.
Consequently, thanks to the design of a general provision such as the present one, along with a tightening of the parameters that determine  BIS Review 62/2008  5  the specific provision, the Spanish banking system had the highest volume of provisions among the developed countries when the market turbulence emerged. Last lesson: on how the turbulence affects us all I have attempted to convey to you that, in Spain, banking regulation has proven to be strict, having included concern over procyclicality among its criteria for action, and that Spanish banks have properly managed the risks associated with financial developments in recent years. The absence of a subprime segment, of an originate-to-distribute model, of complex structured products and of off-balance sheet investment vehicles attest to the fact we have all done the right things. Can we afford to be complacent? I would say no, for three reasons. First, because if we have not made certain mistakes, this is largely due to the fact that our financial system has been very traditional, without sophisticated institutions such as those that have most suffered from the turbulence. Second, because, as I have already said, the Spanish economy needs to undergo adjustment in several areas, but essentially in that of residential investment. And third, because the strong interconnections within the financial system, which is today more global than ever, mean that if markets cease to function, that has negative consequences not only for those that generate the problems but for all those participating in them.