The Diplomat in Spain

Luis María Linde, in search of the prestige lost./ Picture: Bank of Spain.

Ana Linares. Madrid.

“What a moment”. This may be the expression that best describes everything ahead of Luis María Linde, the Governor of the Bank of Spain (BdE in its Spanish acronym), when he took up his position in June 2012.

Those who attended the ceremony say that the exclamation referring to the opportunity of the appointment came out of the King’s mouth and he was not wrong. Linde took up this position in one of the most decisive moments for the future of the Spanish financial system. Only a month before that, the government had asked for help in order to bail out one of the main banks of the country and the sector knew that all eyes would be on their accounts for quite a long time.

The position required an expert by agreement, someone who got deep knowledge on the institution to lead, on the international bodies supervising us and on the sector.

If one reads Luis María Linde’s Curriculum Vitae realizes that the position seemed to be made just for him at that moment.

The current Governor of the Bank of Spain was born in Madrid in 1945. He graduated in Economic Sciences and, when he was 24 years old, he was the first one of his year in one of the most prestigious examinations of the country, the one for the Higher Institution of Business and Economy Experts of the State.

During his extensive career, this economist aged 69 years old, has held many positions both in and outside the country. However, when it comes to dealing with the sector’s problems, it must be pointed out that his contacts with the Bank of Spain have been many and very important. In 1983, he was appointed general deputy director and head of foreign operations in the institution. Soon after, in 1987 he became director general of the foreign department within the BdE.

Those who know him, remember that this last stage in the monetary authority corresponded to one of the most ferocious speculative attacks suffered by the peseta (the Spanish national currency before the euro) in the recent history. We have to remember that the Spanish national currency went through nine devaluations during the 90s, for example, and that, despite that, it could stay in the European Monetary System (EMS). Then, everyone thought that Linde was an old hand to deal with the situation of crisis.

The Governor of the Bank of Spain has also foreign experience, which was convenient in a moment when the IMF and Europe had their eyes on the sector, since they were supervising the restructuring process of the Spanish financial sector. Linde was a Business Consultant of Spain’s embassy in the USSR and executive director for Spain in the Inter-American Development Bank (IDB) from 2005 until 2008. Some people say that his experience in the former Soviet Union made Luis María Linde to reduce his most progressive political tendencies a little. In some forums, people say he is “to the left’s right” and maybe that was which made him look as a good candidate for the PSOE.

He was rotating Governor of the Bank of Spain in the Committee of Governors of Central Banks of the European Union and member of the Committee of International Relations of the European Monetary Institute.

Essential branches if one takes into account that, although the IMF has already closed the bailout of the Spanish banking and the financial system starts to recover, the situation ahead of the sector and the Bank of Spain and its governor is not easy.

Maybe the most difficult is yet to come: banks taking the normalization’s way and starting to allow credit flow in the system, which would speed up the economic recovery. Besides, they would have to do it following the new regulations of Basilea III while they take the strict periodic tests of the European Union, known as “stress tests” whose result will be known in October. For the moment, the Bank of Spain has decided to use the tests with most of the system, 16 banks.

However, maybe the most difficult challenge for Linde is recovering the prestige lost in an institution that used to be one of the strictest monetary authorities and that best supervised their financial system until the crisis burst.

For the moment, one of the collaborators in the Bank of Spain affirms that “it is very easy to work with him” and highlights his great sense of humour, although, “he demands what he has to demand”. In fact, according to people from the Bank of Spain, he is better when you meet him, because he is a very affable person.

By the way, Luis María Linde, as well as an affable person, seems to be a cautious one, according to this paragraph: “Any political power that can make the government obey its orders can be scary from afar and must be much scarier seen up close. When difficult decisions must be made, where there are no disinterested witnesses, there must be no time or place for dissimulation or euphemism either: these would be little functional. Whenever there is, truly, power exercised over others, assertions and acts of those in charge, have to appear, inevitably, completely transparent. That must happen, even, in cases far from those –the 20^th century has left terrible examples, without precedent in history– where that transparency reaches a pathological paroxysm and power is, directly and usually, expressed through crime and genocide. Mafia power can be considered as an image of any political power seen in its transparent roughness and, eventually, in its criminal privacy”.

The Governor of the BdE is a heavy reader and the last paragraph is part of one of his articles where he talks about mafia books.

Linde’s biography from the BdE

http://www.bde.es/f/webbde/COM/sobreelbanco/organiza/LUIS_M_LINDE.pdf

Article about Bankia’s bailout in The Diplomat:

https://thediplomatinspain.com/el-sector-bancario-espanol-dos-anos-despues-del-rescate-de-bankia/