Savings, banking and financial instability

Abstract

The Cajas de Ahorro have been emblematic financial institutions for the Spanish financial system. With the current crisis´s impact on the Cajas de Ahorro, Spain´s central bank has submitted them to a process of intervention, which has led to a process of concentration and centralization through mergers in order to strengthen and improve their balance sheets, and, therefore, convert them into banks. Turning the 45 Cajas de Ahorro into banks has been the response to the financial and economic crisis in the Spanish financial system.  These actions have allowed for the reshaping of the sector.  Yet facing deep financial instability throughout the financial system, particularly so with the Cajas de Ahorro, their transformation into banks does not resolve the original problem.