All these measures for the support and restructuring of the financial system have proven technically correct, they are well adjusted to Spain’s situation, and they were rapidly designed and approved with broad consensus. Certainly, such characteristics should be applied to other areas so needy of reform, such as the rebalancing of public finances and certain labour market institutions. The need for restructuring has been understood by most of the banks that required this to ensure their viability and soundness in the future, and they have reacted by working on various integration processes. In previous talks I explained the criteria used by the legislator for these processes, and which are those that should prevail: the sufficient reduction of capacity, the soundness of the resulting banks and the minimal use of public funds. These should be the goals both of banks themselves and of all the public authorities intervening in the process. BIS Review 51/2010  1  Along with restructuring, my recent speeches on the financial system have focused on a matter I consider, unquestionably, to be the biggest risk hanging over Spanish credit institutions, especially the least diversified ones: mass unemployment. Unless a reform of our labour institutions that tackles this most serious and most Spanish problem with resolve is approved promptly and with the widest possible consensus, many of our credit institutions will suffer the consequences: more bad debts, less business, higher public indebtedness and, consequently, dearer wholesale funding, etc.
Miguel Fernández Ordóñez: The restructuring of the financial system Opening speech by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the XVII Meeting on the Financial Sector/Deloitte-ABC, Madrid, 13 April 2010. *  *  *  Good morning. Let me first thank ABC and Deloitte for the opportunity to address such a select audience as that gathered here today. I have tried to explain from the outset of the crisis that, although it may have compounded the main problems besetting our economy, these are specifically Spanish problems. Accordingly, their solution unavoidably involves adopting domestic measures without counting on an improvement in the external environment to resolve them for us. Among these problems is the necessary restructuring of the Spanish banking system. This sector, which grew in parallel with the extraordinary real estate expansion of the past 15 years, now shows overcapacity and insufficient capitalisation in the case of certain institutions, meaning re-sizing and appropriate restructuring are needed. Last year, in this same forum, I referred to the need for banks to be aware of the situation facing them and to set about the task at hand. Today, with few exceptions, I believe they are doing their homework. Regarding the restructuring of the financial system, the government and Parliament too have done what they had to, and correctly so in my view. On one hand, formulas such as nationalisations, “bad banks” and capital injections without requiring that capacity be reduced have been rejected.