These include prudent regulation, more intensive supervision than that of other countries, a business model geared essentially to retail banking and sound management at most banks. But let me also stress – as it seems to me an example of what could be done now with the labour reform – that the government and the opposition, which has supported it in Parliament, have expeditiously agreed on a series of high-quality financial system reform measures that have proven most effective in preventing credit institutions’ problems from bringing the country’s economy to its knees. We should not forget that if, for instance, the legislation on the funds for the acquisition of financial assets and on guarantees for bank and savings-bank bond issues had not been approved, we would no doubt have witnessed a shut-down of wholesale funding on global markets and an abrupt contraction in credit that would have led to a deep recessionary spiral. Fortunately, this did not occur. That does not mean that credit standards are the same now as before the crisis. One of the most notable consequences has been the increase in risk aversion, which stood in the previous upturn at very low levels. This increased risk aversion translates into much stricter lending policies. As a result many companies, particularly small and medium-sized ones (for various reasons, such as the fact that they are not audited and are generally less capitalised than large companies), have seen their ability to obtain funding restricted, occasionally beyond what may be considered reasonable.
For this purpose, they will have to undertake the downsizing of the sector and, at the same time, push through measures to raise efficiency through cost containment and through the introduction of improvements in their risk control and management mechanisms and of ongoing innovation in product marketing and in the implementation of technological and organisational improvements. And  4  BIS Review 27/2010  the government could crown the significant financial reforms made so far with one directed at savings banks. I am thinking of the reform needed so they can raise high-quality equity funds that enable them to grow and continue serving Spanish society while complying with the requirements to which they will be subject in the new international regulatory environment in the coming years. The financial system reforms adopted to date might suffice for the Spanish banking system to get through the crisis and be in a position to extend credit to those needing it in the recovery phase. But this will only happen if the reactivation of the Spanish economy comes in a form that substantially reduces the number of unemployed, improves its competitiveness and increases productivity. If this does not happen, obviously the restructuring task that we would have would be much greater than that facing us at present. Thanks to the reforms adopted, the Spanish banking system has not been an additional problem during the crisis.