6  BIS central bankers’ speeches  necessary to steer the economy towards the “good” equilibrium. As a consequence, OMTs can succeed only if action is taken by governments, at national and at euro area level, to restore long-term growth and bridge fiscal and economic imbalances. The framework for OMTs is based on six main elements (see slide 10). First, strict and effective conditionality. A necessary condition for initiating OMTs is that a  Member State activates an appropriate EFSF/ESM programme, which envisages strict and effective conditionality spanning the fiscal, macroeconomic, structural and financial spheres. And the design of conditionality and the monitoring of such a programme can largely benefit from the involvement of the IMF. This is however not sufficient. The country also needs to maintain (at least some) market access. And this is signalled by the reference the ECB has made to the need for the EFSF/ESM programme to include the possibility of primary market purchases. In addition, and most importantly, the Governing Council maintains full discretion to initiate OMTs, focusing its assessment exclusively on monetary policy considerations. The second main element on which the framework for OMTs is based is a built-in exit strategy. OMTs will be terminated when one of the following conditions materialises. OMTs are no longer warranted due to threats to price stability; the aim of OMTs has been achieved; there is non-compliance with the conditionality established in the EFSF/ESM programme. This announced rules-based approach represents a way to address time inconsistency.

State of the banking sector The macroeconomic environment dynamics, which is strongly influenced by internal political and geopolitical factors, presents new challenges to the banking sector as well. The sector is meeting these challenges in a strong position, both institutionally and as specific indicators. The institutional framework is determined to a great extent by the country's membership in the European Banking Union, one of the key euro area institutions, and also by the related close cooperation established between the BNB and the ECB. For example, our banking supervision is an inseparable part of the Single Supervisory Mechanism of the European Banking Union – from participation in the joint supervisory teams, through the horizontal networking, to the full-fledged participation in the decision-making process of the ECB Supervisory Board. In this sense, the Single Supervisory Mechanism is a high quality stamp with regard to the standards of the supervisory activities performed by the BNB, and with regard to the quality of the regulatory, prudential and analytical framework of the supervisory process. The consolidation of the institutional framework in addition to the reforms over the recent years explains the good state of the banking sector. I will illustrate this with some numbers: The liquidity coverage ratio at the end of October was 253.5%, and the liquidity buffer was BGN 38.4 billion with a continuing trend of growth of attracted funds; Capital adequacy according to the latest data is 20.47%, with the capital surplus above the general supervisory requirement for capital and macroprudential buffers standing at approximately BGN 2.9 billion.