Along the same lines, since the recently approved Royal Decree-Law reacted in time to the huge distrust triggered by the crisis in Ireland, it headed off the sharp credit crunch that would have occurred as a result of the vast majority of Spanish banks being locked out of the markets. Most projections point to a stronger economic recovery in the second half of 2012 and in subsequent years. And this scenario should be strengthened by the effects of the structural reforms. This more favourable environment, together with synergies, cost cutting and increased efficiency associated with the completion of the savings bank integration and restructuring processes and the reduction of surplus capacity in the sector, should contribute to shaping a more positive scenario for the profitability of the Spanish banking sector. Conclusion Let me conclude by reiterating that there are grounds for us to be hopeful and patiently optimistic subject to certain conditions. Indeed, during the latest phase all the agents involved – government, Parliament, the European authorities, the ECB, the Banco de España and the banks – have moved in the right direction, and this has had its reflection in market perceptions in recent weeks. However, market confidence è mobile; it can be easily lost and, therefore, we must not be complacent. We are on the right path to emerging successfully, and even strengthened, from the difficulties that have affected our economy and banking system. But, for this to happen, it is essential for the reforms to continue and for them to remain ambitious.

With regard to the operation of the secondary market of government bonds, the Bank of Thailand is currently working on the promotion of a full-fledged primary dealership system to facilitate the conduct of open market operations. We aim for the primary dealers to eventually provide marketmaking functions for both government and private securities. The operation of primary dealers or counterparties of the central bank will be complemented, should market participants deem it useful, by the presence of inter-dealer brokers, who can assist in ensuring continuous two-way quotation, as well as helping to preserve the anonymity of transactions or positions held by a market participant. In August 1999, we appointed 9 counterparties, which comprised eight banks and one securities firm. Starting 19 January 2000, the Bank of Thailand also began trading outright with the 9 counterparties. This operation serves as a monetary policy instrument as well as the mechanism to promote the development of the secondary bond trading. At this early stage, the outright operations will be conducted primarily in the benchmark issues or those with potential to become benchmark issues. These selected counterparties are expected, ultimately, to become primary dealers and we are currently working on putting the right incentives to ensure that appropriate rights and obligations be accorded to these primary dealers. The third area I would briefly touch on is infrastructure issues. Here, work is ongoing to promote a fully automated system of delivery versus payment (DVP) settlement, information disclosure, and instituting appropriate code of conduct on market participants.