Spanish banks in Latin America have traditionally operated under a subsidiary model, whereby they are financially autonomous from the head office and they have to comply with the host country’s capital requirements and deposit insurance schemes. In turn, supervisory responsibility is shared between the host country and the home country supervisors. Another factor of resilience behind the business model of Spanish banks in Latin America is their focus on retail banking, which tends to be less volatile and more closely linked to the real economy than wholesale or investment banking. Both the emphasis on retail banking and the principle of financial autonomy of the subsidiaries induce banks to fund themselves primarily through the deposit base in the host country. This reliance on domestic funding has favoured “business as usual” even if the home country was enduring financial stress, and has helped to reduce the financial vulnerability of the host country by mitigating the exposure to external flows. I am aware that even if the subsidiary model has proved its resilience during the crisis, it may involve some costs in terms of liquidity management, and that alternative banking models may have their virtues depending on the nature of the banking business. With due attention to limiting financial vulnerabilities, the question of models for cross-border banking has to be addressed with the necessary flexibility.
As you can see in the programme, there will be three sessions which will take up each of the topics I have just addressed. Each session has been organised as a panel discussion so as to facilitate the presentation and exchange of different views, with three panellists from both sides of the Atlantic. After each panel, we have allotted sufficient time for an open general discussion. Finally, at the end of today’s proceedings, President Trichet will make the closing remarks of the Seminar. I hope we will have an intense and very productive day’s discussion. Without further delay, I give the floor to my friend Governor Carlos Costa, who will chair the first session of the seminar on global rebalancing. Thank you  BIS Review 172/2010  5