chart 2 ). in the same period, the personal savings rate fell from 11 per cent of disposable income to 1 per cent, while household debt doubled from 84 per cent of disposable income to 165 per cent. 1 financial innovations, including home equity loans and securitization, drove these trends. initially, they increased financial system efficiency, diversified risk, and smoothed consumption. over time, however, these financial technologies were applied increasingly indiscriminately. prudence gave way to exuberance to the extent that the subprime - mortgage household debt includes the liabilities of households, non - profit organizations, and unincorporated businesses, as the debt of the latter is ultimately a claim on the household sector. market became a mainstay of the expansion. 2 when the u. s. housing bubble collapsed under its own weight, households with the least resilience were the hardest hit. an important lesson of the american experience was that the costs were not confined to the most vulnerable households. in a now - familiar chain, problems in subprime quickly spread to prime mortgages, structured products in general, core funding markets, and, ultimately, the capital bases of most major financial institutions. eventually, virtually every financial asset in the world was repriced. financial stability is as much about linkages as it is about specific risks. shocks can have large, unanticipated consequences. a lengthy period of adjustment for the u. s. consumer has just begun ( chart 3 ). a decline of roughly 30 per cent in wealth has promoted a quadrupling of the u. s. personal savings rate to 4. 5 per cent. nonetheless, household debt levels have not fallen substantially, and consumer spending as a share of gdp actually rose to a new high of 71 per cent in the third quarter. 3 given the historic declines in net worth and the need to save for retirement, it appears clear that u. s. household savings need to remain elevated for an extended period of time. the new equilibrium for household savings will depend on multiple factors, including wealth effects, risk aversion, the evolution of the financial system, the employment outlook, and the credibility of fiscal policy. 4 the bank currently projects that the u. s. personal savings rate will average around 5. 5 per cent over the next two years. this judgment is consistent with ultimately stabilizing the u. s. net foreign liability position and rebuilding u. s

miguel fernandez ordonez : the restructuring of the financial system opening speech by mr miguel fernandez ordonez, governor of the bank of spain, at the xvii meeting on the financial sector / deloitte - abc, madrid, 13 april 2010. * * * good morning. let me first thank abc and deloitte for the opportunity to address such a select audience as that gathered here today. i have tried to explain from the outset of the crisis that, although it may have compounded the main problems besetting our economy, these are specifically spanish problems. accordingly, their solution unavoidably involves adopting domestic measures without counting on an improvement in the external environment to resolve them for us. among these problems is the necessary restructuring of the spanish banking system. this sector, which grew in parallel with the extraordinary real estate expansion of the past 15 years, now shows overcapacity and insufficient capitalisation in the case of certain institutions, meaning re - sizing and appropriate restructuring are needed. last year, in this same forum, i referred to the need for banks to be aware of the situation facing them and to set about the task at hand. today, with few exceptions, i believe they are doing their homework. regarding the restructuring of the financial system, the government and parliament too have done what they had to, and correctly so in my view. on one hand, formulas such as nationalisations, “ bad banks ” and capital injections without requiring that capacity be reduced have been rejected. such formulas were probably unavoidable in countries that have seen the bulk of their banking systems collapse, but are absolutely inappropriate for spain ’ s circumstances, where most of the sector is essentially healthy. on the other, the capacity of the banco de espana has been reinforced to act effectively when it is necessary to take control of banks and, in turn, an appropriate framework has been set in place so that those banks that so require may access the funds needed to restructure. even if still currently viable, they are encouraged in this way to go ahead with restructuring, which allows them to be prepared to lend without problems once the recovery arrives and the current declining pattern of the demand for credit turns around. these measures – implemented in the royal decree law creating the frob ( fund for the orderly restructuring of banks ) – have been adopted with a broad parliamentary consensus, enjoying the support of the two main parties, in a similar fashion to the consensus behind the swift response of our authorities