The clearest example was the constitution of institutional protection schemes initially, without which it would have been extremely difficult to finally bring about inter-regional mergers. Today some of these problems have already been resolved thanks to these seven laws that have gradually improved the resolution instruments available at the start of the crisis. For instance, with all savings banks having converted de facto into banks, the current situation differs greatly from that at the start of the process, when the regional governments had the  4  BIS central bankers’ speeches  power to veto mergers. And although the perseverance and skill of the Bank’s supervisory arm managed to convince most regional governments of the inevitability of merging with savings banks from other territories, there have been cases in which sounder inter-regional alternatives were turned down for the sake of mergers which, though they were viable in the scenario then foreseen for the Spanish economy and avoided, moreover, more costly interventions for taxpayers, were clearly worse than the mergers suggested by the supervisor. As encouraging examples of Spain’s achievements during these years, I have chosen the progress made in correcting the current-account deficit and in financial restructuring. However, I could have chosen other actions. For instance, the Pension Reform Law has made historically significant changes and, if its sustainability provisions are properly implemented, will enable not only the pensions of our generation, but also of our children’s, to be paid without problem.
More encouraging is the principle of better late than never, and the important thing is that Spain initiated the process of bank restructuring, now nearing completion, in 2009, that significant measures to reduce the budget deficit began to be adopted in May 2010 and that an ambitious labour-market reform was introduced in February this year. Spain has proven itself capable of making adjustments and reforms and this is essential to restore long-lasting upswings and sustainable growth. But this reassurance must not lead to complacency. What we have done so far, despite its huge importance, is not sufficient. And some of us have the thankless task of pointing this out. For example, when each financial reform has been approved it has always been argued that the result will be more credit, but although bank restructuring is certainly an absolutely necessary condition, we have always seen that it is not sufficient by itself to make credit flow again. We have to restructure the financial system so that, as in any process of industrial adjustment, the resulting banks can generate a healthy profit and be sufficiently solid to meet demand when the adjustment process is complete. However, credit will not improve until solvent demand increases. Hence the importance of other economic reforms to boost consumer and investor confidence, such as reducing the budget deficit and reforms, such as the labour-market one, to increase the economy’s growth potential.