Further, the crises in Turkey and  BIS Review 38/2002  1  Argentina once more highlighted the vulnerability of some emerging economies and certain shortcomings in the architecture of the international financial system. And finally, there were the attacks of 11th September, which had a specific and strongly depressive effect on confidence. Despite this build-up of adverse effects, the world economy proved notably resilient. This was all the more striking considering that on this occasion the downturn coincided in the three main areas (the United States, the European Union and Japan), which a priori heightened the risk of a deep and prolonged decline in world output. With the exception of Japan, the industrialised countries avoided going into recession, while the emerging economies, although seeing a decline in their growth rates, have on the whole remained more buoyant than the developed countries. The opening months of 2002 have gradually confirmed the greater buoyancy of the world economy. This is clearer in the United States, but is also perceptible in other countries. Activity, confidence and employment indicators have all firmed, and GDP growth forecasts have been revised upwards. Nonetheless, elements of uncertainty remain in place over the strength and timing of the ongoing recovery. These relate essentially to the persistence of certain imbalances in the US economy (linked mainly to the shortfall in private saving and the high foreign deficit), the weakness of the Japanese economy and the crises besetting certain emerging countries.

Accordingly, as supervisors we should test principles, theories and procedures against the reality of events in financial systems. Both within and outside Spain, last year provided us with representative cases of weaknesses that leave no room for complacency and which require fresh thought and responses. The rest of my speech will deal with these aspects. Let me begin by noting that no new initiative it is sought to take in this field may be considered in isolation. It must be part of a two-dimensional framework. First is the matter of international coordination, since in markets as interrelated as is currently the case, the stability and behaviour of the system has an international facet. And second is the multi-disciplinary dimension, since, as revealed by the welter of problems I discussed in connection with the ENRON case, it is becoming increasingly evident that no banking supervision model may be expected to be efficient if the rest of the institutional apparatus underpinning the rationale of the market economy does not function properly. Among these institutional underpinnings, there are two which, although they affect all companies, I consider to be of particular importance for the workings of credit institutions and for their proper supervision. The first is the need to reinforce market discipline. On the basis of adequate, reliable and updated information compiled by companies, duly verified by independent auditors and impartially evaluated by analysts and rating agencies, such discipline should simultaneously act as a deterrent to and penalise imprudent, inappropriate or simply mistaken behaviour.