of state capitalism that is hardly compatible in the medium term with an open world subject to multilateral rules. the eu, long - accustomed to preventing the heterogeneity of their economies from hampering the progress brought by economic integration, must take an essential lead on this matter. the wto ’ s conflict - resolution system has been pivotal to the sound functioning and predictability of the system. and this is why a solution must be found to the current blocking of appointments to the appellate body. significantly, a system of trade relations based exclusively on bilateral agreements is not the best solution. these usually give rise to a degree of “ trade deviation ” that detracts overall from the positive effects of “ trade creation ”. moreover, bilateral agreements may promote an asymmetrical system of international relations in which the most influential countries ultimately impose their priorities and demands on the rest. in the financial arena, the difficulties of reforming imf governance and the perception that its resources might be insufficient in the event of a severe crisis have led regional financial agreements to proliferate. there has been a shift from a multilateral system to one more decentralised and fragmented. in this new system of global financial governance, we must acknowledge that regionalism and multilateralism can be compatible, as some problems are regional and are better resolved at that level. indeed, regionalism and multilateralism are not mutually exclusive ; rather, they can support and complement one another, generating synergies that strengthen the global financial safety net. in this connection, coordination among the different elements should be reinforced, departing from the basis that a regional system can complement, but not replace, that of the imf. in this respect, i believe the imf continues to play an essential role for several reasons. first, because of its unique experience and knowledge of crisis - management. second, because the imf ’ s participation in the design of adjustment programmes provides an objective perspective that regional institutions may occasionally not offer and which, moreover, is respected both by national authorities and by the private sector. third, because in the case of interconnected economies, the imf ’ s participation can dissipate the potential regional concentration of risks. fourth, because the imf is the only institution capable of mobilising a substantial amount of resources if a global crisis occurs. a good example of how institutions can adapt and react to challenges is the approval of the banking regulation reform package known as basel iii by the basel banking supervision committee

. accordingly, in july 2008, ccm was required to draft a report on future business plans and a strategic assessment of its position as at that time. this report, along with the supervisor's conclusions further to the inspection in the first half of 2008, highlighted the need for ccm to find a solution that would ensure its future viability, preferably by merging with another savings bank. this message was officially communicated to the senior management of ccm at the beginning of october 2008. they began the search for an institution interested in merging with ccm. the failure of these negotiations is what finally prompted the decision taken last weekend. * * * ccm was formed in 1992 as a result of a merger of various savings banks in the region. it currently has a balance sheet exceeding €26 billion ( representing approximately 0. 8 % of total spanish financial system assets ) and about 3, 200 employees and 600 branches. as regards solvency, as at 31 december 2008 the institution had positive net worth for accounting purposes ( i. e. net assets exceeding debts ), even after recording the adjustments estimated in the inspection which is now being completed. these adjustments mean that the institution will incur a significant loss for the year, but one which is far from the figures being publicly aired. that said, i do not wish to suggest that ccm has an adequate regulatory profile, since from a prudential standpoint it does not meet the minimum regulatory capital requirements. allow me to clarify this point further. as you know, spanish solvency law ( which adopts the eu rules known as basel ii ) requires credit institutions to observe a minimum capital ratio of 8 % of their risk - adjusted assets. the institution, with a level below 8 %, does not currently meet this requirement. however, this does not mean that it is insolvent or that its net assets are insufficient to meet its liabilities. part of this non - compliance with the capital ratio is due to the growing provisions for loan impairment and to the large losses on its portfolio of corporate holdings and financial investments, which had a negative impact on its income statement. the analysis currently being completed by the supervisor and ccm ’ s external auditors, which is based on data relating to end - 2008, allows us to predict that ccm will post a significant loss in its consolidated financial statements for 2008. this changes the projections issued by its former directors. indeed, the former directors should have submitted the final accounts for 2008 at the board