authorities, while the rest of the system will be indirectly supervised by the ecb through the national supervisors. in numbers, out of approximately 6, 000 credit institutions in the eurozone, the ecb will directly supervise around 130 banks, covering around 85 % of total banking assets. the single mechanism will be based on the idea of centralised supervision, offering a common view for the supervision of the whole sector, while building on the knowledge and expertise which exist at national level. this common view will be established in a set of rules and standards which will be laid down and developed by the eba and the ecb itself. with the single rulebook as a basis, other instruments will also ensure that the same approach is used in the supervision of all banks. this will include the supervisory manual and ecb regulations, guidelines and general instructions. bis central bankers ’ speeches resolution of credit institutions single resolution, the second pillar of the banking union, is a necessary complement of single supervision. it is essential that if a bank enters into difficulties, it may be efficiently resolved with no or minimal costs for european taxpayers and with little impact on the european financial system and on the real economy. the draft regulation on single resolution, submitted by the european commission to the council and the parliament last july, builds on the concept, envisaged by the european council more than a year ago, that is, a resolution system comprising a single resolution authority and a single resolution fund. in such a system, resolution will be based, first and foremost, on common eu “ bail in ” rules, whereby banks ’ shareholders and creditors should first bear the cost of a bank resolution. only if this were not enough, would the single resolution fund – meaning, the industry – step in, making the fiscal backstop the very last resort. this “ bail in ” principle is embodied in the proposal of the bank recovery and resolution directive which was approved by the ecofin last june ; we expect that it will be approved shortly by the european parliament. obviously, this directive will enter into force in all eu member countries, independently of their participation in the banking union. however, the regulation establishing the framework for a single resolution mechanism or authority and a single bank resolution fund is just beginning to be negotiated, after, as i said before, a draft was presented by the commission in july. ideally, the regulation should be in force by january 2015, but we all know that there are difficult political and technical problems, in particular in relation to the

budget for 2012. the intensification of the sovereign debt crisis from the summer of last year interrupted the mild recovery that the spanish economy had begun a year earlier, with a decline in gdp of 0. 3 % in the final quarter of 2011. this pattern ran into the first quarter of this year, so that the spanish economy is, once again, in recession. as in the case of the 2008 – 09 recession, national demand is displaying the greatest weakness. all domestic demand components declined in the fourth quarter of 2011 and have continued to do so during the first few months of this year. a strongly negative factor during all these ups and downs has been the need to reverse the accumulated imbalances ( the assignment of excessive resources to housing, high indebtedness and competitiveness losses ), as part of an adjustment process that has still to be concluded. more recently the intensification of the sovereign debt crisis and its effects on the financial system has compounded matters, leading to a tightening of the economy ’ s financing conditions and eroding agents ’ confidence. the downward revision of euro area growth prospects and the stepping up of fiscal consolidation have contributed to a further contraction in consumer demand and investment, and the acceleration in the decline in employment has further fuelled these trends. in the face of slack national demand, the external sector has once again acted as a shock absorber, alleviating the negative impact of lower spending on output. in recent quarters, however, this relief has come about more through the channel of lower imports than that of more buoyant exports, which is attributable to the parallel weakness of some of our main european customers. bis central bankers ’ speeches in these conditions, the outlook for 2012 is not favourable and remains subject to a high degree of uncertainty. broadly, the banco de espana ’ s view does not differ greatly from that of the government implicit in the macroeconomic table accompanying the budget. the process of adjustment of national demand will continue. private consumption will be affected by the decline in employment and by the lower support that general government will be giving to household income. however, the impact of these two factors will be partly offset by more moderate price increases and, probably, by a continuation of the decline in the saving rate, although the margin available for this to smooth the pattern of private consumption is increasingly limited. business investment will undoubtedly be affected by the slackness of domestic spending and because many firms will continue aiming to reduce their level of indeb