interpretations and boost its implementation. but the most debatable issue is the imposition of new restrictions on temporary hires, especially if permanent hiring does not improve sufficiently. in the current conditions, with more than 4. 5 million spaniards unemployed, all job creation opportunities must be kept open and not in the least impaired until the new channels for permanent hiring prove effective. in short, the fiscal consolidation programme, the pension reform proposals and the labour market reform measures are three areas in which significant advances have been made by the authorities in the last few weeks, but in which much work remains to be done. let me now move on to the area of reform which falls directly under the responsibility of the banco de espana, namely the restructuring of the financial system and, more specifically, of the savings bank sector, where there has been appreciable progress in recent weeks. in the last few months a very significant portion of spanish savings banks has concluded merger agreements with other savings banks, in what is the largest restructuring of the spanish banking sector in a long time. these movements started with the creation of the frob ( the fund for the orderly restructuring of the banking sector ) in june 2009, nearly two years into the international banking crisis affecting the markets and financial systems of all developed countries, and to which spanish financial institutions were exhibiting a marked resilience that most have maintained to date. this new fund responded to the need to downsize the spanish banking sector, particularly the savings bank segment. after a prolonged period of growth, this segment had reached a size which, given the evolving demand for banking services, entailed a clear excess of capacity. from an individual standpoint, the prolongation of the crisis affected the capacity of institutions to generate profits for the following reasons : an increase in non - earning assets ( doubtful loans and repossessed real estate assets ), the narrowing of margins due to a fall in income associated with rising non - earning assets and to a higher cost of funds, the decrease in business volume, etc. moreover, the high growth of previous years, due particularly to increased business with the real estate sector, had raised the dependence on wholesale debt markets, exposing savings banks to the liquidity risk associated with adverse developments in those markets. compounding this is the intrinsic limitation of savings banks when it comes to raising core capital, a limitation which is important because the trend in both the markets and the prudential financial regulation currently under international revision is clearly towards stepping up requirements in this

years ( extendable to seven years ) and earns the market rate of interest ( at least 7. 75 % ). the figure is not final because four processes have yet to be authorised. in addition, cajasur will receive the aid finally resulting from the competitive procedure. furthermore, the savings bank dgf, which is financed by contributions from savings banks, undertook to provide €3. 8 billion to caja castilla - la mancha. these amounts, while substantial, are small compared with those provided by the taxpayers of other countries. therefore, it is fitting at this point to recall that spain is now enjoying the benefit of the decision in 1999 to oblige banks to record a general provision : since january 2008 our banks have used some €18. 2 billion of this provision to cushion the impact of the crisis on their income statements. as can be seen, this amount is more than the sum of the funds used or to be used by the frob and the savings bank dgf in the operations described above. thus the main decisions have already been taken on the required restructuring and downsizing of the savings bank sector. one task remains in connection with these credit institutions : a legal reform to enable them to issue instruments eligible as top - quality own funds and to provide formulas conducive to improved governance and professionalisation of savings bank management. the banco de espana ’ s confidence in the soundness and competitiveness of the spanish banking sector is based on the extensive information we have on the situation of each bank, obtained in the exercise of a supervisory function based on in - depth scrutiny and closeness to the supervised party. we also have the results of regular stress tests of the capacity of banks to cope with possible negative changes in the economic conditions in which they operate. at this moment, as the markets and some sectors of international public opinion are expressing distrust and reservations about the situation of several european financial systems, and particularly spanish savings banks, the banco de espana has announced its decision to publish the results of stress tests in order to ensure the highest possible transparency of the situation of spanish banks. since agreement has been reached in europe to conduct and publish common stress tests, the banco de espana will join this initiative and, therefore, publish the results of the stress tests on spanish banks as soon as this common framework allows. the restructuring and reform of the financial system, together with the budgetary adjustment and the pension and labour market reform, are the most urgent measures needed to restore confidence in the