First, the strengthening of the capital position of banks, following the conclusion of the cleaning-up, recapitalisation and restructuring of the 2  BIS central bankers’ speeches  financial system, is contributing to enhancing their capacity to finance the economy. The Comprehensive Assessment carried out last year at the European level also contributed notably to restoring investors’ confidence in the Spanish banking industry. The increasing reintegration of European financial markets since 2013, stemming from various actions taken both at the national and European level, does also facilitate the normalisation of the economy´s financial flows. These initiatives include the adoption by the Eurosystem of a number of bold, unconventional monetary policy measures, including the introduction of new long-term operations linked to new lending (the so called TLTROs) and the purchase of public and private sector securities. The ongoing improvements to euro area governance arrangements are also operating in the right direction, helping stabilise European financial markets and reducing their fragmentation. One key development in this field is the Banking Union, which, though still incomplete, marks an unprecedented step towards a genuine European common mechanism of rules and procedures for supervising and resolving banks and protecting their depositors. All in all, the recent normalisation in European financial markets has contributed to a significant easing in financing conditions in those jurisdictions that were previously under higher macrofinancial pressure, including Spain. As a result, the cost of lending in these countries has tended to converge gradually to the lower levels observed in the core euro area.

Financial institutions, such as those represented here, with a mandate to promote access to financing for SMEs, can make an important contribution in this field. In any case, it is also necessary to study ways to tackle directly the asymmetric information problems faced by these firms. This in turn requires enhancing the quality and quantity of information available on both the credit track record and the financial situation of companies. In this regard, it is worth mentioning a new regulation recently approved in Spain that obliges banks, under certain conditions, to pre-announce three months in advance should they decide not to roll over existing credit lines or loans at maturity. Also, in those cases banks are obliged to provide relevant information on the credit profile of their customers whose loans are not rolled over. The Banco de España, in response to the mandate conferred to it under this new regulation, is currently working on a Circular, which will specify the relevant information to be  BIS central bankers’ speeches  3  provided to the SMEs in these circumstances, together with a methodology to produce a standardised report on the SME credit assessment. Other actions that could also help mitigate the possible frictions in the credit market during crisis periods include those facilitating debt restructuring by improving the bankruptcy legislation. These measures, if well-designed, could help to smooth the reallocation of resources from non-viable firms to viable and productive firms.