Given a stock market climate already depressed by the ongoing correction of the bubble that affected the technology and communications sector, this lack of confidence further propelled the downward trend on the equity markets, which favoured the fixed-income markets. Moreover, the crises in certain emerging economies continued, especially in Latin America, and this also contributed to the general risk-aversion of investors on international financial markets. A key feature of recent developments in the world economy is that the aforementioned shocks, whose common denominator is their impact on agents’ confidence, affected all the developed economies and some of the emerging ones almost simultaneously. This highlights how, in an increasingly globalised world, the transmission channels on which expectations turn (and which exert a key influence on the financial markets) are extremely rapid. All economies, especially the most developed ones, are prone to the impact of this type of disturbance, whose origin may be very remote and whose relationship to a specific national economy’s fundamentals may seem far-removed. The loss of confidence stemming from the aforementioned shocks was, in turn, amplified by various deep-seated imbalances in the world economy which have not been corrected or have even worsened, including most notably the US current-account deficit and persistent deflation in Japan. These underlying weaknesses stoked up uncertainty and a climate of mistrust in various segments of the world economy, all of which contributed too to checking and postponing the onset of recovery.

They are an innovation in the true sense of the term which will affect not only capital headings or financial statements but also business strategies, risk management, etc. Take, for example, the issue of transparency, both in Basel II and in IAS. This does not involve merely disclosing specific information to the market. The requirements in this area represent a far-reaching revision of the means of compiling financial information. That will not only affect financial statements; it will also influence banks’ decision-making arrangements. Undoubtedly, this revision will entail changes to information-gathering systems, both quantitatively and qualitatively. Banks must therefore be prepared for the consequences of greater public scrutiny of how they do business. This involves not only giving more information, but explaining decision-making, and addressing the consequences that greater transparency may have for relations between managers and current and potential investors, analysts, depositors, credit rating agencies, auditors and, also, supervisors. Turning to IAS, the Banco de España, as a supervisor with a legitimate interest in bank accounting, will continue to play an active role in shaping the accounting rules applicable to credit institutions. That said, it is vital that banking institutions should accept the qualitative changes imposed by the new accounting environment. Specifically, IAS impose greater responsibility - the corollary of their flexibility - on bank managers, which is in contrast to the current state of affairs, where the precision of accounting rules largely limits discretionality.