The objective of the central bank’s control is to stabilise CCM, to avoid a liquidity collapse and to manage the institution for as short a time as possible with a view to finding an orderly solution. Ultimately, the viability of CCM’s future business may be achieved in different ways (for example, through a merger with other credit institutions), with the Banco de España currently not ruling out any options. The response to these options will be swift, but not immediate, and will require the collaboration of authorities, financial institutions, employees and creditors. I would not like to forgo the opportunity of appearing before this Committee without highlighting some of the messages recently conveyed by the Banco de España. Firstly, I would like to reiterate that involving savings banks in the political debate makes it immensely difficult to find flexible and effective solutions. Opinions become distorted, suspicions, demands and expectations of the parties involved grow and solutions become increasingly complicated. We should not forget that past experience in Spain and abroad shows that prudence and discretion are prerequisites for reducing the costs of possible solutions for troubled institutions. Otherwise, we will make the authorities work more difficult and, ultimately, taxpayers will pay a higher price. In finding a solution to the difficulties encountered by CCM, the Banco de España has adhered to its tradition of adopting decisions based solely on the objectives of preserving the stability of our financial system, minimising the cost in terms of public funds and maintaining the availability of sufficient financial services.

In 2001, average inflation rates in the region as a whole fell to single figure levels for the first time since the fall of the iron curtain and, thereafter, they have continued to decline. In this context, let me highlight that, bearing in mind the potential inflationary pressures that might arise from completing structural reforms, the conduct of a  BIS Review 58/2002  1  monetary policy in the accession countries aiming at price stability should be seen as a medium-term objective, rather than as a short-term target. However, the sound management of macroeconomic policies cannot rely on monetary policy alone. In particular, stability-oriented policies in accession countries need to be supported by sound fiscal policies. Prudent fiscal policy management has been key to making sustainable progress in terms of macroeconomic stabilisation in the accession countries. At the beginning of the transition to a market economy, poor tax collection and governments' limited access to financial markets led to substantial monetisation of public deficits. However, from the mid-1990s onwards, fiscal policy has focused on macroeconomic stability. Therefore, a key lesson from the accession countries' experience is that responsible fiscal policy has been a crucial element in achieving and maintaining macroeconomic stability. Looking ahead, the best contribution that fiscal policies can make to sustainable noninflationary growth is by pressing ahead with fiscal consolidation, as is necessary to ensure the flexibility needed to deal with potential domestic and/or external economic shocks in the medium term.