Spain has followed the lead of the developed countries, and you should rest assured that CCM will meet all its commitments to depositors and other creditors. Second, the Maastricht Treaty prevents central banks from extending emergency liquidity assistance to an ailing institution, such as CCM, without the appropriate collateral. Given the amounts that might have to be committed, the Spanish Treasury had to provide explicit guarantees to the central bank, so as not to infringe the Treaty’s prohibition on central banks extending "monetary financing" to public Treasuries. *** Having explained the substance of and the reasons behind the urgent replacement of CCM’s directors, allow me to offer greater details on the Banco de España’s past supervisory measures in relation to CCM and its current situation. Before that, however, I should highlight what is a primordial starting point: CCM is a credit institution with a positive net worth. That is to say, and in the vernacular of the press, the institution has no "hole" in its balance sheet. Yet this does not mean it is not facing serious problems, the cause of which must be sought in an inappropriate management of risk and a forceful business expansion – especially in the real estate sector – funded largely through resort to the international bond markets, generating sizable imbalances. Past experience shows that these credit expansion policies are very dangerous if unaccompanied by the related risk control measures since, generally, they usually entail a relaxing of credit standards. Responsibility for these decisions falls on CCM's previous directors.
Lorenzo Bini Smaghi: Looking beyond the euro's first decade Speech by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at “The euro’s second decade: status quo and perspectives”, British Embassy, Berlin, 18 February 2009. *  *  *  It is a great pleasure to be here today. The publication of David Marsh’s new book, shortly after the euro’s tenth anniversary, is a good opportunity to review the status of the currency and its prospects in the coming decade. It’s a real “Marsh book” – a pleasure to read, even though some quotes and statements might sometimes be controversial. In any case, David Marsh seems to have taken to heart the main lesson of the current financial crisis: avoid excessive risk. Indeed, he is walking along a kind of tightrope, often quoting people or presenting views in such a way that they contradict or contrast with each other. That way, he is likely to come out on the right side of things, whatever happens. Let me give an example, by quoting the very last paragraph of the book, which looks forward to the next ten years: “The lesson of the first decade is there is no certainty that the single currency will survive the next one unscathed. Yet if the Euro overcomes its trials and becomes a durable success, that accomplishment, measured by all that has gone before, will truly be the richest of triumphs.” In other words, either it’s a real success, or…it’s a real disaster.