This would allow resolutions to be adopted in particular areas by a limited number of countries, with the possibility of other economies joining them at a later stage. This multilateral approach could also be used to approve reforms to adapt the WTO rules to the recent changes in the world economy and thus restore global confidence in a system of trade based on respect for clear well-defined rules, curbing the proliferation of protectionist measures and boosting global growth in the long term. The need to promote the opening up of trade in services, where the potential gains are still substantial, should also be mentioned. Lastly, in the domestic policy realm, the authorities need to adopt a number of policies (boosting labour market flexibility, solid social security networks and education and training opportunities) to satisfactorily address the distribution of the potential benefits of trade among different population groups. The new institutional architecture for the euro One of the structural elements that has changed most as a result of the combined financialsovereign crisis in Europe is the institutional architecture of the euro area. The financial crisis revealed a number of shortcomings and deficiencies in various aspects of the design of the Economic and Monetary Union (EMU), such as the absence of fiscal stabilisation mechanisms for the area as a whole, the lack of crisis management instruments and the incoherence of the supervisory arrangements and of national bank resolution, while there was a manifest need for progress towards genuine financial integration as a logical consequence of the monetary union.

I will then address the changes in euro governance, before moving on to discuss the role played in recent years by monetary policy. Finally, I will focus on the case of Spain, to briefly review the events of the last few years and then outline the main challenges facing the public finances, supplyside policies and the banking industry. Progress on institutional design and supra-national economic policies and their challenges Reform of the international financial system At international level, the global financial crisis highlighted the need for far-reaching reform of the regulatory and supervisory frameworks. The efforts made in recent years in this area have given economic policymakers updated instruments and new tools with which to address future risks relating to the financial system, its stability and its relationship with the economy as a whole. Thus, right from the early stages of the crisis, the G20 set in motion a series of reforms covering a number of areas, including microprudential and macroprudential banking regulation, international accounting standards and the regulation and monitoring of non-banking sectors, among other measures. We are currently in the phase of assessing the suitability of all these new instruments, some of which are still to be tested in crisis situations. In the microprudential domain, the Basel Committee on Banking Supervision undertook a far-reaching review of the regulatory framework, which would become known as “Basel III”, with the aim of increasing the resilience of the banking system and reducing the impact of financial crises on the economy.