IMF Managing Director Welcomes Spain's Measures to Strengthen the Banking Sector

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement on the measures announced by the Spanish authorities to strengthen the country’s banking sector:

“I strongly welcome the comprehensive set of measures announced today by the Spanish authorities. These measures offer an effective response to the vulnerabilities of the banking system while appropriately providing greater transparency and differentiating the needs of the various financial institutions. We endorse the authorities’ approach of significantly raising provisions as a cushion against potential future losses, of providing a government backstop to those institutions that may need additional time, of restructuring and resolving the banks with state participation, and of implementing an independent diagnostic review of all banks’ portfolios to frame appropriately
further steps.

"These actions, which are in line with the recommendations of the IMF’s Financial Sector Assessment Program (FSAP) mission, that recently visited Madrid, are consistent with best international practice and demonstrate the authorities’ resolve to ensure the stability of the banking system. The full implementation of these measures will help bolster confidence and support the economy’s return to growth.”

Source | International Monetary Fund - Blog NEWS | http://imf-news.blogspot.com/2012/06/imf-managing-director-welcomes-spains.html

Measures rather than targets

An interesting statement by Christine Lagarde:

"On the Fund’s part, we are favorably considering that this be done in as timely and flexible a manner as possible: slowing the pace of fiscal adjustment where needed; focusing on measures rather than targets..."

Success of this strategy relies on the level of confidence and consensus on "measures". One possibility is to express the targets in intervals that reflect the uncertainty on "measures". By settling on the level of uncertainty we could gain flexibility and accept the realization of a slower path of adjustment.  

Source | The Portuguese Economy | http://theportugueseeconomy.blogspot.com/2012/09/measures-rather-than-targets.html