of them. the law proposes substantially improving general government transparency at the different stages of the budgetary process. in particular, timely detection of budgetary deviations is considered essential so as to adopt measures. consequently, it would be advisable to begin publication of the regional government monthly revenue and expenditure outturns as soon as possible, as envisaged in the organic law ( article 27. 3 ). the law further includes coercive instruments to ensure compliance with budgetary targets by all levels of government. such instruments can be effective in ensuring discipline if rigorously applied and if the appropriate procedures for overseeing the budget outturn throughout the year are set in place. but the pressure of everyday events should not make us lose sight of the medium and long term. allow me to refer here to the major reform of the pensions system approved in july last year. this checked a pension spending dynamic that was endangering the sustainability of public finances over the medium and long - term horizon. but it should be recalled that this reform did not cancel out all the risks arising from population ageing. it would thus be desirable to properly define the so - called sustainability factor, so that the parameters of the system may adapt automatically to future demographic developments. admittedly, the economic difficulties such as high unemployment and low growth that we face are most serious. but the main problem currently confronting the spanish economy is the fall in all confidence indicators in recent months, exacerbated in recent weeks by the management of the latest banking crisis. restoring confidence is the imperative at present, since without it, none of our problems will be resolved. all government measures and all actions taken by economic policymakers and agents should be aimed at restoring the confidence we have lost. and one of the pre - requisites for doing so and for dispelling all uncertainty is that spain should bring its public finances back on to a path of stability in line with its european commitments. i believe there is a sizeable consensus that spain needs to redress its fiscal imbalance and move towards a path of stability, in line with its european undertakings, and that this is a pre - requisite for restoring confidence and dispelling uncertainty. consolidation measures have been tabled that are capable of bringing about this change of direction in budgetary dynamics. and, above all, the national budgetary framework has been substantially reinforced in order to allow the coordination, monitoring, surveillance and, where appropriate, correction of deviations by the different tiers

) of the main economies in terms of compliance. in this respect, peer review exercises have begun and a major effort is being made to identify those areas in which the regulatory framework does not sufficiently recognise risks, placing particular emphasis on those institutions, instruments and markets which are not currently regulated or supervised. in addition to all these efforts in the field of regulation, work is ongoing to set in place more effective and uniform microprudential supervision of financial institutions. the financial crisis has revealed major supervisory failings in certain jurisdictions. in these cases supervision did not adapt sufficiently to the increasingly global nature of financial activities and it was not as intensive as would have been necessary. as a result, certain banks ultimately built up excessive risks, prompting public interventions with a high cost for taxpayers. this was due in part to excessively lax supervisory standards, which led to insufficient monitoring of institutions under inspection and to the underutilisation of the information available to supervisors, and which allowed the excessive growth of the “ shadow banking system ”. work is now in progress to define and standardise ways in which material information on transnational institutions can be exchanged through so - called colleges of supervisors, which group together the supervisors of the countries where these institutions have a significant volume of activity. substantial headway has been made in a short time and improved supervisory cooperation at international level and at european level ( with the creation of new european supervisory authorities ) will unquestionably enable more effective action. i would like to emphasise here another dimension which the banco de espana considers crucial, namely the improvement of national supervision. the first step in achieving effective international supervision is to ensure high quality national supervision, not only of large institutions, but of the whole system, since systemic risk may flare up due to a mere contagion effect. the second step is to foster the convergence of a majority of countries towards uniform and higher - quality supervisory standards. in this respect, work is commencing on a review of the various national supervisory models with a view to developing principles based on sound supervisory practices. lastly, i would like to emphasise that a key issue in discussions on changes in regulation and supervision is the search for ways to mitigate the problem of moral hazard associated with so - called systemic institutions. some of the more perverse consequences of the crisis have manifested themselves in these institutions, i. e. those which, owing to their size, their inter - connectedness or the difficulty of replacement of their business areas, are too “ big ” to