with the buoyancy of credit. patently, too, these institutions were excessively fragmented, which increased their difficulties in raising finance on the wholesale funding markets. finally, the crisis also brought to light the obstacles arising from the corporate structure of savings banks, which prevented them from raising high - quality capital on the markets and which, frequently, did not provide sufficiently for best - practice governance arrangements. had capital been injected into the savings banks without making such aid conditional upon what is inevitably a longer, riskier and more complex process of restructuring these institutions, that would have been of no use in resolving our main problems. therefore, it was opted to establish this conditionality and to promote an integration process designed to bring about sizes that would enable the institutions to be more efficient and to more readily obtain funding from the markets ; to implement capacity - reduction plans ; to introduce management changes ; to write down balance sheets with a charge to private funds ; to convert savings banks into banks, and to raise capital on the markets. true, a plan of this scale and complexity does not enable difficulties to be overcome overnight. yet it is not an overstatement to say that, once the process has been concluded, it will have brought about a reform that should be valid for many years. let ’ s now look at our economy ’ s biggest problem : the difficulties our legal and institutional framework poses for job creation and which mean that, even in good times, spain is one of the countries with the highest unemployment rates in the world. earlier i referred to the importance of identifying and acknowledging problems. it suffices to look at the figures available and, in particular, at our very high unemployment rate – at 21. 3 % – to see that we have a serious home - grown problem, stemming from the shortcomings of our legal and institutional framework. pick up a copy of the economist and go to the final pages, where there is a table with the economic data for the 40 biggest economies in the world. you ’ ll see that the vast majority of these countries have unemployment rates below 10 % and that only two of them, spain and south africa, surpass the striking 20 % threshold. sometimes these high figures are attributed to other structural factors, such as the lower level of educational attainment and productivity. on other occasions, more conjunctural factors such as the real estate bubble are mentioned. but if we compare ourselves with other countries, the difference is a legal and institutional framework that seriously ham

banking system. as regards fiscal consolidation, the stability programme that has targeted a deficit of 3 % by 2013 is an ambitious plan. it has been recognised by the european union and has been met in its first year. accordingly, all tiers of government – central, regional and local alike – must rigorously fulfil the targets set for the current and coming years. turning to the identification of the problems posed by part of our banking system, the government and parliament reacted promptly. as early as 2009 the frob ( fund for the orderly restructuring of the banking sector ) legislation was approved, allowing the start of the restructuring of an extensive number of savings banks. and, whenever necessary, the government and parliament have not hesitated to adopt further legislation so as to speed through and conclude this process, as evidenced by the approval of the savings bank law in 2010 and, more recently, the passing of the royal decree - law on the capitalisation of our credit institutions. the fact these regulations have been approved with an acceptable degree of parliamentary consensus is most positive. in this case, as in that of cutting the deficit, it is expected that savings bank restructuring will be completed how and when the parliament has decreed. despite affecting a limited part of the banking system, the restructuring has generated such noise that the doubts as to whether the legislator should have adopted more drastic solutions are understandable. but i bis central bankers ’ speeches should say that some of the alternatives, such as injecting capital into the savings banks without making this conditional upon their restructuring and resizing, might have entailed more disadvantages than advantages, compared with the option actually chosen by the legislator. unlike other countries which found that their major banks had collapsed practically from one day to the next, the problem of the spanish banking system was confined to a part of the savings bank sector. and i stress “ a part ”, since some of our savings banks are perfectly sound when set against the commercial banks. however, during the upturn some savings banks had pursued a model centred on high credit growth with high exposure to the real estate development and construction sector. with the arrival of the crisis, the shortcomings of this model became clearly evident. in the new setting, with a rapid deterioration in asset quality, with margins diminishing and with business volume expectations much lower than in the past, it could be seen that it was essential to restructure balance sheets and reduce the sector ’ s capacity, which had expanded in prior years in parallel