The last point that I want to make is that I disagree with those economists who speak of the difficulty of anticipating the East Asian crisis, since these countries had assembled all the ingredients of a perfect crisis recipe: •  An appreciated exchange rate;  •  A high and worsening ratio of short-term debt to usable foreign reserves;  •  Untransparent off-balance-sheet items in the banking sector;  •  A widening current account deficit;  •  Steep growth of domestic credits;  •  And a continuous decline, during recent years, in emerging markets’ borrowing spreads without matching improvement in their economic fundamentals. If someone should combine all these elements, it is conceivable that they might succeed in creating a crisis. But the world’s financial centers turned away from the existence of this perfect crisis recipe and turned toward the Turkish economy, for which, ignoring the developments in East Asia, they predicted a crisis during the last couple of years. The Turkish economy does not satisfy the perfect crisis recipe described above. Of course we have high inflation, a high nominal budget deficit, and high short-term domestic debt, but on the other hand Turkey’s exchange rate policy, current account situation, the nature of its short-term external debt, and other fundamentals do not indicate an alarming situation. The East Asian crisis should have greatly improved the ability of economists to predict an episode. I would be glad to see some evidence of this improvement. BIS Review 50/1998

The figures on falling employment and rising unemployment in Spain in recent quarters dramatically illustrate how our labour market accentuates the contraction in employment in downturns and acts as the main factor amplifying recessions. As you all know, this is Spain's most negative distinguishing feature relative to other advanced countries. Decidedly, we cannot put off adopting, as soon as possible, reforms to staunch the ongoing rate of dismissals and to promote to the full new hires. It is vital to reform those labour market arrangements whereby the main means for the adjustment of Spanish firms continues to be labour shedding. Here, the current collective bargaining system plays a key role. As it stands, it prevents working and wage conditions from adjusting in a sufficiently differentiated manner to the different labour and productive environments that companies and productive sectors face. The adverse effects of our particular collective bargaining system are not so visible in periods of strong growth, although then, too, they hamper increases in productivity. But in today's circumstances, where the crisis impacts companies and productive sectors very unevenly, such effects mean that the adjustment operates by unnecessarily forcing out a large number of workers from the market. Therefore, at least during the crisis, collective bargaining agreements should be applied flexibly to allow employers and workers to reach temporary agreements within individual companies so that, in these exceptional circumstances, working conditions can be adjusted in exchange for maintaining employment levels or softening reductions. Recent days have seen some agreements along these lines.