The resulting anxiety led to the waning of trade on a number of financial markets. As the banks have become increasingly dependent on the financial markets for their funding, many banks now found it difficult to refinance their operations. In other words, they found it difficult to borrow in order to cover their lending. When the US investment bank Lehman Brothers was forced to apply for bankruptcy protection in September last year, this had major repercussions in many parts of the world. The global financial crisis escalated and the Swedish banks were also affected to an increasing extent. When the conditions on the global financial markets deteriorated, there was a general increase in credit risk premiums. For those borrowers – banks or countries – that were deemed to entail the highest risks, the premiums increased more than for others. A process to reduce exposures and debt/equity ratios began among banks and other financial institutions around the world. The rapid decline in the supply of credit reinforced the downturn in global economic activity. This in turn accelerated the substantial fall in asset values and the increase in the bank's credit losses. A vicious circle arose in the global economy in which the financial turmoil aggravated the weakening of the real economy and vice versa. The events in the financial sector reflect fundamental failures in the risk management of the financial players. Securitisation partly removed the banks' incentive to monitor credit risks. 4  BIS Review 41/2009  The credit rating institutions largely took over this role.

Moreover, managing a company requires certain skills – interaction, strategic, operational and control abilities – that also appear to be comparatively lower in Spain than in countries such as Germany, the United Kingdom, France and Italy. In any event, the indicators available on business management should be viewed with caution. It is not clear they distinguish appropriately between entrepreneurial capabilities per se, as opposed to structural problems arising from an institutional framework that constrains the capacity to organise firms’ productive resources. For instance, excessive Spanish labour market segmentation does not facilitate on-the-job training of either temporary or permanent workers. Thus, on top of improving entrepreneurial and employee capabilities, doing away with the excessive duality of employment contracts is fundamental for raising productivity. To conclude my thoughts on the importance of human capital, allow me to refer also to the need to improve the relationship between general government and the firm in two spheres: that of vocational training and that of innovation. On vocational training, it is essential that firms should be involved in the guidance of youths seeking their first job. But it is likewise necessary that the administration should evaluate and adjust the vocational training system as business needs evolve. Recently there has been much discussion of the virtues of dual vocational training, based on the positive results in other countries. But it is difficult to define how best to transfer a system such as Germany’s, with a high prevalence of large industrial corporations, to Spain’s very different business sector.