reform involving the clean - up of balance sheets, recapitalisation and restructuring, and the resolution of non - viable institutions under the recently concluded financial assistance programme. as you will recall, this process rested largely on an asset quality review exercise and a stress test similar to those now being undertaken as part of the preparations for the single supervisory mechanism. there are, in any event, some notable differences that should be taken into account when comparing both exercises. for instance, the spanish asset review exercise involved an bis central bankers ’ speeches exhaustive analysis of all domestic business, while its european counterpart will review a selection of portfolios, albeit encompassing both domestic and foreign - based business. further, although the 2012 stress test envisaged a highly adverse macroeconomic scenario, its focus was on the loans portfolio of institutions in spain. conversely, the scope of the european exercise will be much broader, including in its adverse scenario shocks – both at the level of the global economy and at that of each national economy – that affect all types of exposures, including the sovereign debt portfolio. all told, spanish banks ’ starting position ahead of the new exercise can generally be confirmed as relatively favourable, if we consider the disposals of problem assets, especially by the most vulnerable banks, the recognition of impairment of the assets most affected by the crisis and the sizeable increase in all banks ’ loss - absorption capacity. 4. beyond the analysis exercise in any event, the exercise will, irrespective of its final result, be a good opportunity to reflect on the relative strengths and weaknesses of the spanish banking sector. and this can provide a platform for banks to take strategic measures enabling them to strengthen their competitive position in the new institutional framework. in this connection, the regional diversification of the major banks – following a model of stand - alone subsidiaries, in terms of both capital and liquidity – has clearly been an advantage that has enabled them to soften the impact on their profits of adverse but not synchronised macroeconomic developments in different economic regions. also worth highlighting is their proven capacity to obtain high levels of profitability in the retail business and to maintain the value of franchises, despite the shortcomings evidenced in the selling of loan and deposit products. mention may also be made of the traditional conservatism in provisioning policy, advocated by the supervisor, which has enabled banks considerably to ease the impact of the economic crisis on their solvency levels. on this latter point, the necessary harmonisation of

a slowdown in recent years due to their high dependence on the exports of raw materials, their trade integration with china and their financial integration with the us. in addition, there are also internal factors, such as the modest productivity growth. but the recent improvement in financial markets has especially benefited countries in that region, as their sovereign risk premiums have diminished, their exchange rates are now appreciating and capital inflows have returned. this could provide scope for macroeconomic policies to support growth by implementing structural reforms. all in all, the current situation of the world economy is characterized by a high degree of uncertainty. downward risks are more evident in emerging economies insofar markets maintain doubts about the strength of the chinese economy, the behaviour of commodity prices and the course of monetary policy in the us. bis central bankers ’ speeches euro area : recent developments and challenges ahead in the euro area, the prolonged period of subdued economic activity has taken its toll on the welfare of our societies as well as on confidence and the capabilities to recover soon a higher growth rate. some rough numbers may help to illustrate the dimension of the challenges ahead. according to the spring - 2016 economic forecast by the european commission ( ec ), the level of employment will reach that recorded in 2008 only by next year, and a similar comparison could be made in terms of the real gdp per capita. long - term forecasts have been revised downwards in recent years – being potential growth now most likely closer to 1 % rather than to 2 % –, on account not only of demographic factors, but also the legacies of the crisis. macroeconomic developments started to turn more positive in the second half of 2013 and in 2014, and accelerated in 2015, although only up to a modest rate of 1. 5 %, supported by an expansionary monetary policy, reforms of the institutional framework of the emu, reduced financial stress, and, more recently, lower oil prices. the first weeks of 2016 came with a significant deterioration of global financial indicators, like stock market valuations or debt spreads. in the case of the euro area, aggregate financial conditions fell back to their prevailing levels of one year before, just when the ecb had announced an expansion of its already very ambitious qe program. preliminary gdp data for first quarter 2016 q1 posted a higher number ( + 0. 5 % compared with + 0, 3 % in the last two quarters of 2015 ). uncertainty and a weak global economy keep the balance of risks to the downs