In other words, according to this criterion, the CCyB should be used to build up resilience among banks against the reversals that typically follow periods of 4/11  credit exuberance. Thus, the idea is to protect banks against the risk of failure in a similar way as under the traditional microprudential approach to capital regulation. However, the BCBS immediately added a second goal: Due to its countercyclical nature, the countercyclical capital buffer regime may also help to lean against the build-up phase of the credit cycle in the first place. This is a more ambitious goal. It means actively combating excessive credit growth, aiming to curb the development of a credit cycle boom. Moreover, a third goal is also referred to by the BCBS, this time connected to economic contraction phases: In downturns, the regime should help to reduce the risk that the supply of credit will be constrained by regulatory capital requirements that could undermine the performance of the real economy and result in additional credit losses in the banking system. In fact, this objective closely follows the original 2009 G-20 recommendations to mitigate procyclicality, including a requirement for banks to build buffers of resources in good times that they can draw down when conditions deteriorate. Under this third objective, the CCyB should also be helping banks withstand the capital implications of an economic contraction (lower profits, higher defaults, and prospectively higher PDs and LGDs) without tightening the capital constraints to the extent that the credit supply and hence the real economy is damaged.

I have no doubt that, in these two days, both supervisors and financial stability policy-makers will have a constructive and enriching dialogue with academia on macroprudential policy. Macroprudential institutional framework in Spain: the creation of AMCESFI The timing of the conference is particularly important for us, since our new macroprudential institutional arrangements have just been set up. In early 2019 the Spanish Macroprudential Authority – Financial Stability Board (AMCESFI by its Spanish acronym) was created. Its main goal will be to contribute to the promotion of coordination and the exchange of information on financial stability issues among the Banco de España, the Ministry of Economy and Enterprise, the Spanish National Securities Market Commission and the Directorate-General of Insurance and Pension Funds. Such an institution provides Spain with a structure similar to that of other EU Member States, in line with the recommendations issued by the European Systemic Risk Board and the IMF. In parallel, the supervision of the financial system was reinforced, extending the range of macroprudential tools available to the sectoral supervisory authorities, which remain individually responsible for deciding when they should be activated. In particular, the Banco de España is now empowered to require banking institutions to establish countercyclical capital buffers by credit segment, limits on concentration in relation to economic activity sectors, and limits and conditions when underwriting new loans (in terms of loan-to-value, loan-to-income and debt service-to-income, and also the maturity, the currency in which the operation is denominated and whether the interest rate is fixed or variable, among others).