Noteworthy in the area of regulation are the proposals made by the Basel Committee for Banking Supervision, which directly address the need to increase the amount and quality of capital held by institutions to absorb potential losses, the advisability of introducing minimum liquidity standards, and the usefulness of creating capital cushions to help moderate credit cycles. Specifically with regard to the aim of dampening the tendency of markets to amplify economic cycles, headway is being made in the design of provisioning systems which, in essence, are similar to those in place in Spain since mid-2000 (the dynamic or countercyclical provision). International accounting regulators, particularly the IASB, also seem to be converging towards these systems. Also with the aim of mitigating excessively procyclical behaviour of financial markets, management compensation guidelines have been drawn up to discourage excessively risky strategies. Also in the pipeline are major regulatory changes to mitigate the moral hazard problems posed by institutions which in various ways ultimately acquire what has come to be known as systemic significance. Naturally, this regulatory adjustment will have a significant impact on financial institutions. That means that, irrespective of how long a transition period is deemed appropriate, financial intermediaries should now set in motion the adjustment process, to ensure the least possible upheaval. Spain’s financial institutions have understood this and are notably strengthening both the level and quality of their capital. The restructuring process of the Spanish banking system runs alongside the reform of the global financial system.

But before that, let me say a few words about our monetary policy. Our monetary policy is doing its part, thanks to its persistence and patience, as Mario Draghi stressed this morning. Past questions about its effectiveness and our exit strategy seem to have receded – and rightly so. We confirmed last week our course of gradual normalisation, with the removal of the so-called “easing bias” on the APP. What we see now is a welcome alignment of the stars: against the economic background of a robust expansion with gradual progress on inflation, there is a broad convergence of market expectations with the views within our Governing Council. At present, there is very little debate among us. But this convergence doesn’t preclude vigilance. We’re closely watching the somewhat slow pace of inflation – I believe the Phillips curve is still at work, although with a time lag – and the global risks, starting with US trade policy and the evolution of the exchange rate. Let me now turn to the core of my message: the need to strengthen our Monetary Union by making concrete progress on Economic Union. There is currently a window of opportunity: the economic recovery is robust, and many euro area reform proposals point in the same direction, including the Commission roadmap of December 2017, President Macron’s speech at the Sorbonne last September and, more recently, the European chapter of the German coalition agreement. The outcome of the recent elections in Italy shows that we can’t waste any more time with theoretical debates.