i need not stress that these movements are negative for our recovery prospects and, in general, for an economy such as spain that is increasingly integrated into the global framework and which in recent years has notably improved its competitive capacity abroad. the united kingdom ’ s departure from the european union is, in my view, a negative phenomenon, although the results in recent european elections appear to indicate a brake on or at least a re - drawing of the lines marking these trends. in any event, in the euro area – where our economy operates – it will be very important to maintain the goals of integration into the financial and banking area and to address the capital markets union project. but it is important, too, that the achievement of a true economic union may go beyond the financial realm. along these lines, our annual report refers to the discussion of possible ways forward towards a fiscal policy that includes common stabilisation elements within the euro area, in a setting, such as the present, in which the high levels of public debt restrict the budgetary room for manoeuvre in a good number of countries. progress here would contribute to equipping fiscal policies within the area with greater strength and, therefore, to minimising the potential adverse repercussions – economic and social alike – of future crises. thank you for your attention. 8 / 8

miguel fernandez ordonez : recent developments in the spanish economy testimony of mr miguel fernandez ordonez, governor of the bank of spain, to the parliamentary budget committee, madrid, 9 october 2007. * * * ladies and gentlemen, my appearance before this committee as part of the parliamentary discussion of the state budget for 2008 comes at a time when shocks are still reverberating through some of the major international financial markets, and the attendant uncertainty inevitably bears on the analysis of the economic situation. in my appearance before the parliamentary committee on financial affairs on 17 september, i examined in detail the origin and the main implications for ecb monetary policy and for the spanish economy of these shocks, which emerged last summer against a background of marked momentum of the economy and of world trade. a significant part of this dynamism – reflected in growth rates above 5 % for world output and above 6 % for trade – derives from the sound performance of the emerging economies in recent years ; indeed, they seem to have been less affected by the shocks than the more developed western economies. this is, in fact, a significant feature of the present bout of turbulence which, if i may briefly recall, originated in a financial market of a developed country ( the us sub - prime mortgage market ). the turbulence was initially transmitted to other international financial markets through sharp corrections in the credit quality of certain complex structured financial products which, at least apparently, were relatively concentrated in the financial systems of a number of developed economies. the spanish economy is not one of them. although i will pass quickly over this point, which i addressed in depth in my recent appearances before congress and the senate, i do wish to remind you of the safety buffer afforded by the spanish financial system ’ s non - exposure to practices and products of this type and by the soundness of our credit institutions in terms of profitability, solvency and ample provisions. in the economies most directly affected, credit institutions active in originating and distributing these complex structured products have prompted tensions in the interbank markets in which the liquidity provided by central banks to the financial system is redistributed. the rapid response of the central banks, led by the us federal reserve and the european central bank, prevented these tensions from acting as a channel through which the instability was further amplified. we must acknowledge, however, that there are still uncertainties hindering the normalisation of these markets and that dissipating them will require an additional effort by institutions to increase the transparency