For the Spanish banking industry, the year 2013 marked the culmination of a major reform in the framework of the financial assistance programme agreed with the European authorities. This programme began in 2012 and, as you know, concluded last January. The reform has seen the clean-up, recapitalisation and restructuring of the sector. In a complex macroeconomic and financial environment, which required the adjustment of the imbalances that have built up in the previous expansionary phase, the Spanish banking sector has demonstrated notable adaptability. I will briefly review some of the basic parameters marking developments at our banks, in particular the changes in the structure of their balance sheets, non-performing loans and results. I will then underscore the importance of the capital conservation measures in the current setting. Changes in the structure of bank balance sheets Last year, the banking sector significantly reduced the size of its balance sheet, as well as changing its structure. On the asset side, the reduction in lending to the private sector persisted. This reduction was, however, compatible with an increase in the weight of assets relative to the total balance sheet, whereas other asset items – such as deposits at central banks and credit institutions, and derivatives operations – contracted at very high rates. In turn, on the liabilities side, there was a shift towards private-sector deposits, thereby furthering the reduction in funds borrowed from the Eurosystem. In addition, the sector also increased its own funds, the relative weight of which on the balance sheet has gained in significance.

Project Nexus aims to address the challenges of speed, cost, access and transparency, in line with the G20 goals set out for enhancing cross border payments. Users can look forward to: Faster speed. A transaction is cleared in 60 seconds, on a 24/7 basis. Lower cost. The aim is to meet the G20's target for cross-border retail payments across any corridor to come down to less than 3% of transfer value. Wider access. The model will enable connectivity for all users of fast payment systems: banks as well as non-bank financial institutions. Greater transparency. A payment sender will have upfront certainty of fees due, and immediate update on transaction status. High security. The central platform leverages on the strong security and risk mitigation protocols built into national faster payment system. The ten members of the Association of Southeast Asian Nations, or ASEAN, have a shared vision of a multilateral network of payment linkages across ASEAN by 2025. MAS believes that Project Nexus can be a key enabler towards realising this vision. ASEAN is well placed to be a first-mover on this multilateral solution. In fact, as this network expands, we hope to see more countries coming onboard as we build connectivity from ASEAN to the rest of the world. Linking faster payment systems solves the cross-border payments problem but not settlements. While cross-border payments can be made instantaneous through such linkages, the settlement process for such payments only happens sequentially. It goes through a series of correspondent banks and depends on the jurisdictions' respective settlement cycles.