Additionally, in the second half of 2012 they were subject under the Assistance Programme for Spain’s financial system agreed with the European Union to an exhaustive accounting review and a stress test, the result of which led to the recapitalisation and restructuring of certain banks. Moreover, during 2013 several measures were taken to ensure that adequate provisioning levels were maintained, which included, most notably, the review of refinanced and restructured loans. –  As a result of the criteria issued by the Banco de España in 2013 for the proper classification of these operations, Spanish banks reclassified under an inferior category operations amounting to € billion, which required approximately € billion of additional provisions. BIS central bankers’ speeches  3  –  To sum up, between 1 January 2008 and 30 June 2014 the provisioning drive by Spanish banks amounted to € billion, that is to say, provisions amounting to the equivalent of 25% of Spain’s GDP in 2013. Given all these measures, the starting point for Spanish banks was expected to be generally better than that of those in the other European countries as a whole regarding the more demanding criteria for recording assets. And, the outcome of the Comprehensive Assessment which has just been published confirms these expectations. 9. Conclusions  The disclosure of the results today marks the end of a period of just under one year in which all the parties involved – the ECB, the national authorities, the auditors and the banks themselves – have made a sterling effort.
This is a familiar story where the seeds of future fiscal problems are sown during better economic times. In effect, a combination of a strong U.S. economy, a bull market on Wall Street and various forms of fiscal gimmickry masked the increasing underlying fiscal stresses that the city was experiencing. By 1970, when I arrived, some of this good fortune ended when the U.S economy was hit by recession and a bear market in equities began. What followed was a massive economic slump in New York City—what would generally be described as a depression. Some of the numbers are staggering: from 1970 to 1975, New York City saw a 6 percent decline in its population, a 15 percent drop in employment and a 50 percent surge in the murder rate. The combination of the need to roll over debt from the prior two decades, a shrinking tax base and increased costs of debt—which sometimes had been used to finance operating expenses—caused fiscal problems that forced the city to cut services and raise taxes. A continued bear market on Wall Street exacerbated the situation. In effect, New York City looked to be in a vicious cycle with companies shrinking, closing or moving out. The result was fewer jobs, an exodus of people, declining property values, rising crime rates and eroding tax revenues. This meant fewer firemen, police and teachers, which led, in turn, to more crime and poorer educational opportunities. Put simply, it was a horrible dynamic that looked difficult to reverse.