demand by repeatedly using monetary policy beyond what would be consistent with its inflation target. higher levels of economic activity and employment can be attained in the short term, but the costs come later. the inflationary bias is ultimately anticipated and built into agents ’ expectations and, therefore, into pricing and into wage negotiations. the final outcome is higher inflation, without persistent improvements in the level of output or employment in the economy. this renders monetary policy ineffective and commitments to price stability cease to be credible. assimilating the long - term view that price stability requires is harder for the political power, which may have incentives to prioritise shorter - term considerations tied to the electoral cycle. the grounds for the independence of central banks are thus general interest considerations. firstly there is the belief that such independence benefits society far more than if the powers were to be directly assumed by the political authority. and further is that fact that the legitimacy resulting from this independence is conferred by a decision of the state ’ s highest political institutions ( parliaments ). independence must of course go hand in hand with guarantees as to the professional competency and personal integrity of the members of the independent body, especially of its 1 / 6 bis central bankers'speeches senior officers, and controls over, and accountability for, their actions. control and accountability are also crucial to adequate institutional quality. yet aside from independent central banks being an example of effective institutional design when it comes to incorporating long - term considerations into our democratic societies, i wish to use my address to outline three complementary matters. these are, in my view, essential to encouraging the public authorities to include these long - term considerations in economic policy decision - making, and how independent institutions such as the banco de espana can make a decisive contribution. an assessment culture to launch us forward the first of these three matters stems from the incorporation of an ongoing and thorough publicpolicy assessment culture. in a democratic society, evaluating the design and effects of public policies fulfils different political and technical functions. first, it fosters transparency regarding political actors ’ actions and their outcomes. this provides for accountability and democratic control by parliament and citizens. second, it enables the strengthening of the decision - making process via valuable information to enhance the effectiveness and efficiency of public policies. therefore, when “ evidence - based policies ” are promoted, it is both a technical argument in favour of effectiveness and a political statement in favour of citizens ’ and their representatives ’ democratic control of the power. of course, some political matters

stand at 1. 1 %, still slightly below pre - pandemic levels. this change highlights the fact that the rise in the 12 - month euribor has only partially passed through to deposit costs, far less than in previous monetary tightening cycles. 6 banks ’ comfortable liquidity position helps to explain this. similarly, the fall in the cost of equity – by 2 pp between december 2021 and may 2023, when it reached 6. 6 % – has cushioned the rise in the cost of borrowing from banks. 7 the cost of equity rose during february and march 2023, mainly owing to the higher equity market risk premium, although the increases have been moderate. the liquidity coverage ratio stood at 173 % at march 2023, much higher than the required minimum threshold and likewise above pre - pandemic levels8. meanwhile, the net stable funding ratio stood at 130 % at december 2022, again above the minimum requirement of 100 %. further, retail deposits cover a substantial portion ( 75 % ) of the total stable funding needs ( 60 % for european banks as a whole ). assets consolidated assets saw growth of 2. 1 % in 2022, below levels seen in 2020 - 2021 ( 3. 8 % on average ). however, the drop in financial assets in spain ( by 5. 4 % to march 2023 ) is noteworthy, while assets abroad ( expressed in euro ) rose ( by 7. 2 % to march 2023 ). the latter increased to represent 53. 7 % of the total – 4. 3 pp more than one year ago ( 32 % in 2008 ). much of the decline in financial assets in spain is owing to the reduction in balances held with central banks ( - 31. 9 % ) and, to a lesser extent, to the dip in loans to the resident private sector ( - 2. 5 % ). meanwhile, the increase in financial assets abroad was the result of growth in lending to the resident private sector in third countries ( 10. 3 % ) and in debt securities ( 16 % ), against the background of a depreciating euro. 9 the pass - through of monetary policy interest rate rises to average rates on the stock of loans took place gradually over the last 16 months, although it quickened in early standing at 54. 1 % of total consolidated assets at end - 2022, a rise of 14. 7 % since 2019. interbank funding and financing from other financial corporations, as well as market