It also makes greater supervisory cooperation essential, in order to ensure consistent implementation. One concern which has been expressed many times is that excessive reliance is placed on External Credit Agencies for those banks that do not have sufficiently robust internal rating systems. The Committee has been mindful of this concern and if supervisors are uncomfortable with external ratings in their countries, there is an option whereby all corporate claims are weighted at 100% and sovereigns and banks can be risk weighted according to the risk scores of export credit agencies, in which case there need not be any reliance on external credit agencies at all. Indeed, our discussions with colleagues and counterparts from countries outside the Committee have been instrumental in revising the capital framework. Thanks to our consultations, we have endeavoured to address several broad issues in the new framework, which I will set out now. Complexity One inevitable by-product of designing a comprehensive three-pillar framework with built-in options to suit different circumstances is increased complexity. The members of the Basel Committee certainly recognise that complexity is not a virtue for supervisory guidelines. It is far easier to enforce a simple rule than a complicated one. However, achieving a balance between simplicity and comparability, and also between simplicity and risk sensitivity is particularly difficult in an industry like banking, where a culture of constant innovation makes it a tall order for regulators to develop simple rules that fit all banking products and services in all their permutations.

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.