Although the details of this programme are still being worked out, the volume of the funds involved, which including the IMF contribution could amount to as much as € billion, seems sufficiently illustrative of the determination of governments to defend the common European project. Naturally, as in the case of the initial support package for Greece, the possible financial support will always be subject to a strict principle of conditionality, as an indispensable factor to ensure that the underlying problems are addressed with sufficient ambition and determination, and to avoid possible situations of moral hazard which could degenerate into the accumulation of new risks for the future. The European Commission and the European Central Bank have also contributed decisively to this task of strengthening the common pillars of the area. In this respect important steps have been taken to establish a sounder framework of policies to preserve the smooth functioning of the euro area. I refer in particular to the Commission’s recent proposals to strengthen in various ways the Stability and Growth Pact and to extend the areas of mutual oversight and consultation within the EU. The ultimate aim of these proposals is the early detection and redressing of those imbalances which, as has become clear to us in these last few months, will put the stability of the euro area at risk if allowed to continue and accumulate. In this respect, the European Central Bank has also reacted to the emergency situation.
This meant that private sector solutions were prioritised, as has been seen in the processes that have unfolded in the past few months. Today, it is fair to say that the restructuring and recapitalisation of Spain’s financial institutions is well under way. It is now just a case of formalising and implementing the agreements reached. As a result, Spain’s deposit institutions that did not already have sufficient capital have now secured it, either from the markets or from the FROB. The Banco  8  BIS Review 86/2010  de España has conducted stress tests to verify that all institutions – banks, savings banks and credit co-operatives – will actually have sufficient capital available, not only for what would currently seem to be the most reasonable scenarios, but also for complex growth scenarios in the near future. Accordingly, before end-June, the Banco de España will take the steps necessary to formalise the processes already agreed and to ensure they are correctly implemented. If, by month-end, any of these processes has failed, or any institution has been left behind, the Bank will act, using the mechanisms envisaged for this purpose in the FROB legislation. Moreover, the Bank intends to publish the results of these stress tests, to reveal the deterioration estimated, the consequent capital requirements and the capital funding committed, to provide the markets with a perfectly clear idea of the situation of the Spanish banking system.