This option should become widespread, especially for those companies that have not participated in the negotiation of industry-wide or national agreements. BIS Review 43/2009  3  In addition to containing dismissals, these reforms should check the ongoing closure of firms. We should not lose sight of the fact that companies going to the wall entails sizeable decapitalisation costs. This is because it is companies that build up technological know-how and that have far-reaching knowledge of markets and of customer and supplier relationships. And this without prejudice to lifting administrative obstacles and thus ensuring that firms can be created swiftly and easily, so that when the recovery begins the momentum of demand translates into increases in activity and employment, and does not feed through to price rises. To improve the labour market situation, there is also a pressing need to promote new hiring to the full so that workers who have lost their jobs promptly find a way back into employment, avoiding the prolonged periods of unemployment that had such adverse effects in the past. True, creating new jobs depends above all on companies' expectations improving in respect of the demand for their products. But current hiring arrangements fall short on a series of characteristics which, at times of uncertainty such as at present, have adverse effects on recruitment decisions.
BIS Review 43/2009  5  Nonetheless, the answer to restoring the flow of credit is neither publicly funded policies to purchase “troubled” (impaired or toxic) assets nor global and indiscriminate bank recapitalisation plans. While these measures have admittedly been adopted in many developed countries, they are not the most suitable measures for maintaining the flow of credit to the private sector, even if they have been of use in those countries that had to bail out systemic financial institutions. That does not mean they should be totally ruled out. But I am convinced they are of no use for resolving the problem of credit restrictions. The credit-boosting measures best suited to the current situation of the Spanish economy are those aimed at improving the risk profile of both consumer and corporate transactions. This effect may be achieved through different means: e.g. loans subsidised by the Official Credit Institute, credit insurance or the deferral of social contributions. These measures, though not immediately effective and needing complementary action, will help gradually restore lending to companies and consumers. A second challenge for the Spanish financial system is its orderly restructuring in the coming years. The soundness of our financial system, whose behaviour in terms of both solvency and profitability has been patently better since the onset of the crisis than in other developed countries, does not preclude the need for restructuring.