The Single Resolution Mechanism, whose regulation will be published shortly, includes the delegation of the resolution powers in relation to significant institutions to a new European agency (the Single Resolution Board). At the same time, as a result of the new Recovery and Resolution Directive, the combination of significant requirements governing the “bail-in” of bank creditors to cover the potential capital shortfalls of non-viable institutions and the availability of a common resolution fund wholly funded by the industry will considerably reduce the need to resort to using public funds in bank resolution processes. Consequently, BIS central bankers’ speeches  5  the changes introduced by the new European resolution framework could require some adjustments to national arrangements which affect the nature of the resolution authority, its relationship with the supervisor and the degree of direct involvement of government authorities. Finally, I think the time is right to reflect on possible regulatory changes that may help to maintain the strength of other areas of the financial sector, such as credit cooperatives, in the new regulatory and competitive setting. The cooperative sector in Spain, unlike other countries, barely represents 6% of credit activity in Spain, but it plays an important role in specific fields such as rural areas. The sector, in most cases, is well-capitalised with comfortable liquidity positions as a result of pursuing prudent, retail customer-focused management and of scant exposure to the real estate development business. This has enabled it to avoid the problems experienced by other types of institutions.

Along with the ongoing monetary policy normalization in the US economy, the new US fiscal package and its impacts on the economy also absorbs attention. In the EU, as already clearly announced, the accommodative monetary policy, although with lower amount of assets purchase, is expected to apply by September this year or beyond and interest rate changes to take place later. However, the positive global outlook has still been surrounded by various risks, including the still pending outcome of Brexit negotiations, geo-political risks and the possible protectionism measures by the US administration. However, besides the sound and wide spread recovery, an important feature of the global environment is the generally subdued inflation, not always in line with the model-based forecasts and standard empirical findings. In this view, the flattening of the Phillips curve based on current economic data, points to possible altering of the standard relation between the economic cycle and inflation, raising discussion on one of the basic empirical findings in the macroeconomics in the academic and central banking community. The subdued inflation nowadays is mainly due to global factors that are not exclusively related to the commodity prices fluctuations, but also to the impacts of the globalization of production and digitalization of trade worldwide, both having impact on competition and prices in each economy. In such surrounding of prolonged lower inflation, the re-assessment of the time lag in affecting the inflation as well as the inflation measurement, the outlook of inflation expectations and their possible de-anchoring are to be considered.