– to reach 10 % – on those institutions which could potentially create more problems for the supervisor. to be more precise, this higher capital requirement will be applied on those which have less than 20 % of their share capital or voting rights with third parties and that have wholesale funding of more than 20 %. these institutions are not the globally active ones, but they are the locally oriented ones that have created the highest risk for financial stability in spain during recent times. while our largest banks have been more a support factor than a problem, and part of our savings banks sector is sound and profitable, we have faced serious challenges regarding a number of the local savings banks. our experience in this crisis illustrates that we should be careful not to establish over - simplistic solutions to be applied generally. instead, we should concentrate on solving the problems where they really originated. this is precisely the goal of the measures we have adopted in spain during the last two years. we are currently dealing with a deep restructuring process that will end up by transforming those savings banks into larger commercial banks that, in the future, could also become global banks or a part of a global foreign bank. in conclusion, we should not demonise global banks for being global. they can play an important role in the international economy. provided they are safe and soundly managed, they can facilitate the internationalization of non - financial firms, and they can bring greater competition, efficiency and stability to the markets in which they operate. what we need to do as supervisors is to make sure that global banks have adequate risk management capabilities, sufficient loss - absorbing capital, and are subject to intensive and coordinated supervision, so that we are able to contain the systemic risk they pose without curtailing their contribution to economic growth worldwide. we have nothing to fear from global banks which are well - managed, well - capitalised and well - supervised by home and host authorities. what we should do is prevent the emergence of badly managed, badly - disciplined banks, whatever their geographical dimension, as they can expose our financial systems to important risks. i hope that this humble contribution provides food for thought. as i said at the beginning of my intervention, i do not have all of the answers. but i do think that we can and should learn lessons from all experiences, both positive and negative. my words reflect the experience that we have had with our global banks in the last three years. but of course, past successes are not, per se, a guarantee of future success.

that in some countries, legislation mandates preferential treatment of creditors and depositors of local entities of cross - border banks. but that might be weighed by legislatures against the current reality that when the fiscal authority finds itself injecting equity to save a bank and preserve stability, it protects worldwide creditors not just its home creditors. to be clear, i am not advocating any particular approach here. i just want the authorities to articulate the issues clearly, so that our leaders can make a choice and think through the consequences of that choice. i ’ m not sure that it has really been put to them up to now. and, of course, whatever is done, within europe we would need to find an eu version that sat between national and global regimes. summary my purpose today is not to advocate solutions. it is to identify the big issues and to float some possible avenues for discussion in the eu and internationally. the big question is clear enough. can we resolve distressed lcfis in an orderly way without injecting public money? one possible way to cut through too - big - to - fail is to adjust our sense of what “ fail ” involves. perhaps it does not have to involve liquidation or administration. perhaps it does not have to involve a binary shift from “ going concern ” to “ gone concern ”. but it does have to involve loss for equity holders and uninsured creditors. it does have to rekindle market discipline. it does have to preserve the flow of financial services. those are, surely, the essential components of the resolution leg of the regulation, structure, resolution triangle that make up the reform debate. individual countries or economic areas such as the eu can get only so far on their own. to cope with distress in global banking, we need to decide whether or not we want international collaboration in the resolution of cross - border banking groups. that is a question which, one way or another, the highest reaches of the authorities should answer as part of the reform debate. once that is clear, some of the questions about structure and regulation might become clearer. a lot rests on whether we can resolve distressed lcfis. we need to answer the big questions. examples of such safeguards include : creditors left no worse of than in liquidation ; netting and set - off agreements respected ; secured creditor claims and collateral kept together ; and capital market arrangements, such as covered bond programmes and securitisations, protected.