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. some of the key reforms introduced include an increase in the quantity and quality of minimum regulatory capital and the creation of capital buffers. new prudential requirements have also been introduced, such as the limits on large exposures, a maximum leverage ratio and two liquidity requirements, at the same time as the reform of the frameworks for evaluating market risk and securitisations has been launched. in addition, last december, a second wave of reforms introduced within the framework of the basel accords was completed. the focus of these measures has been the calculation 3 / 14 of risk - weighted assets, i. e. the denominator of the capital ratio, in order to improve the comparability of capital ratios across banks and jurisdictions. another lesson of the crisis was that it is necessary to prevent and mitigate the effects of an excessive build - up of risk in the financial system as a whole. an exclusively microprudential based regulatory framework is clearly not sufficient to achieve this. new instruments were considered necessary to help moderate and address cyclical systemic risks ( such as, for example, those associated with the credit cycle ) and cross - sectional systemic risks ( for example, those linked to the risk arising from, among other aspects, the size, complexity and density of the interconnections between financial institutions ). with regard to cyclical systemic risks, a countercyclical capital buffer has been introduced, with a view to preventing risks arising from excessive credit growth at the aggregate level. as for cross - sectional systemic risks, the financial stability board promoted a set of measures to strengthen the capital requirements for systemic banks and to establish stricter supervisory requirements and stronger resolution frameworks for them. the development of microprudential policy also entailed changes of an institutional nature. in europe, the european systemic risk board was created, with the task of microprudential supervision of the financial system of the european union ( eu ). however, at the same time it was necessary to create a framework for action at national level to enable the different sources of systemic risk to be monitored and the adequacy of the new macroprude

14. 12. 2018 economic policy : the challenge of future crises speech by the governor of the banco de espana at the barcelona circulo de economia to mark ten years since the lehman brothers collapse pablo hernandez de cos governor i wish to start by thanking the barcelona circulo de economia for their kind invitation to be here with you today, to close this cycle of lectures organised to mark the tenth anniversary of the collapse of lehman brothers. the economic and financial crisis was attributable to a broad and complex range of factors, but there is no doubt that this event remains engraved on the collective memory as a moment of particular significance, marking in a way the symbolic start of the crisis. the past decade has provided us with numerous lessons for the future, in particular in the area of economic policy management. today, in order to identify outstanding tasks, i am going to devote my speech to a review of the changes that have occurred during these years, both at international and national level, which determine our ability to prevent the emergence of new crises or to mitigate their effects should they materialise. i shall start with the reforms at international level, in particular in the global financial architecture, and the risks arising from protectionism, the intensification of which may have significant negative effects on world growth in the medium term. 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