“XBRL will help Spanish companies assimilate the regulatory changes on the horizon”

It is the banks’ bank and, therefore, the bank which best knows our country’s financial environment. And this is why it has also been one of the main forces behind the Spanish jurisdiction of the XBRL International Consortium. The Banco de España is convinced the Association is the framework needed to be able to develop the data model that will then be shared in each area of its application, reflecting this subsequently in the related XBRL taxonomy. In the medium and long term, this standard has the opportunity to become the preferred vehicular language with those interested in financial results; shareholders, rating agencies, banks and even tax authorities. Time will tell with what speed each community of parties interested in XBRL attains the critical mass needed to bring the opportunity to fruition.

JOSÉ MARÍA ROLDÁN
Director General of Banking Regulation, Banco de España

The origins of the current Banco de España date back to the late 18th century. Thereafter it has borne witness to and often played a leading role in Spanish economic and social policy developments. Since King Carlos III founded in 1872 the Banco Nacional de San Carlos, the direct forerunner of the Banco de España, the central bank has undergone many changes. We currently refer to the Banco de España as the “banks’ bank”. Among its numerous functions are the supervision of financial institutions’ conduct, the drafting of economic and financial studies, the preparation of statistics and the implementation of the single monetary policy decisions in respect of Spanish credit institutions. With transparency as one of the central tenets of its philosophy, the Banco de España also participates in the design of the euro area monetary policy and promotes the stability of the Spanish financial system. But the person best qualified to summarise the work of the Banco de España and its commitment to the development of tools geared to improving processes at financial institutions is JOSÉ MARÍA ROLDÁN ALEGRE, the Director General of Banking Regulation of the Banco de España.

Given your vast knowledge of Spanish financial institutions’ needs, do you think XBRL will mark a before and after in the Spanish financial environment’s working methodology?

XBRL can bring about most notable effects if we agree beforehand what it is we wish to express with it. The Spanish XBRL Association provides the forum needed to be able to devise, with the participation of all those concerned, the data model to be shared in each area of application, and to reflect this in the related XBRL taxonomy. It sufficed to date to view the economic and legal aspects of the information on financial statements. The introduction of XBRL will not substantially change the working methodology in this respect, but it will entail greater demands in terms of executing agreements, and the practical consequences of its implementation will have to be taken into account. In any event, this methodological adaptation is already under way in other contexts and I am convinced that the use of XBRL will help Spanish companies to assimilate the major regulatory changes on the horizon: the comparison between the two Basel accords is a good example of this progressive introduction of formalised international financial regulations, and it is not by chance that our Association has a Working Group specifically for the use of XBRL in the implementation of Basel II.

Bearing in mind that XBRL is a free and open software specification that allows for simpler financial and business information flows by providing for their processing and dissemination, do you believe companies will see the implementation of XBRL-based tools as an opportunity to reduce their costs while improving their professional services?

Naturally, the use of XBRL will require a significant initial investment in training and development and validation infrastructures, but this will begin to be recouped at a subsequent stage. Progress may be made towards offering new services at a very competitive price based on the automated treatment of information exchanged via XBRL. Another possibility is the reduction of maintenance costs arising from the regulatory changes. For firms not belonging specifically to the finance industry, and especially for their finance departments, XBRL has the opportunity to become, in the medium and long term, the preferred communication language with those interested in these firms’ financial results: shareholders, rating agencies, banks, and even tax authorities. Time will tell with what speed each community of parties interested in XBRL attains the critical mass needed to bring the opportunity to fruition. In this respect, the participation of software and consultancy companies in the XBRL community will play a decisive role in the language’s successful extension beyond the strict core of the finance industry.

How is it possible to draw together the interests of organisations as different as those making up the Association and gear efforts to the benefit of the financial sector as a whole?

The Association has only recently been created, so it would be premature to think that it is already capable of effectively distilling the knowledge of its participants. That said, I must say that the Spanish XBRL Association is up and running in what has been a surprisingly short time and with a notable degree of involvement. The Association’s express commitment to the XBRL initiative has proven decisive in motivating associates.

There is still a long way to go, but which initiatives is the Association currently working on and which projects are to be developed in the short run?

The short-term project we are dedicating most effort to is, naturally, the presentation of our Association in society. The practical reflection of this effort will be the presentation conference on 29 September, to be attended by the President of the National Securities Market Commission (CNMV) and the Deputy-Governor of the Banco de España. We also have a presence on the Internet, with the virtual headquarters of our Association to be found at www.xbrl.org.es. This site will act as a preferential communication vehicle with the public at large and among our associates.

Finally, could you comment on any of the objectives set by the Spanish XBRL Association for the coming months?

In addition to having the Working Groups initially set up fully operational, in the coming months we wish to implement the General-Purpose Financial Statements for Financial Services taxonomy between a number of financial institutions and the Banco de España, as a flagship project, coming on stream as a pilot scheme in 2005. The new international accounting standards, which are also effective from the outset of 2005, offer a unique opportunity to achieve synergies with the use of XBRL.

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