on the basis of solid analysis, we determined that asset purchases are a particularly effective tool in the current environment. given the still fragile state of transmission, they are also more efficient than alternative instruments, as they have a more direct impact on the borrowing conditions faced by households and firms. given the continued disruptions caused by the pandemic, the net effects to be gained from the pepp expansion are overwhelmingly positive. the additional asset purchases will contribute to easing credit conditions for the private sector and thus support viable businesses in continuing to operate and in retaining as many workers as possible. this will help to preserve jobs, which is the most important factor determining the income and financial security of individuals and families in the euro area. our measures play a key role in supporting credit intermediation through banks, not least since the business prospects of the banking system depend first and foremost on the macroeconomic outlook. finally, our decisions will make sure that higher borrowing needs by fiscal authorities associated with the necessary fiscal response to the crisis will not translate into materially higher interest rates for the private sector. overall, the decision to expand the pepp will prove to have been essential in avoiding an even deeper recession and in quickening our pathway to normalisation. our measures to combat the crisis also build on instruments already in place that continue to provide significant monetary policy support : our asset purchases under the asset purchase programme, our very low key interest rates, and our forward guidance that firmly connects our interest rate policy and our asset purchases to the outlook for price stability. priorities for the recovery the ecb measures will continue to be crucial in supporting the return of inflation towards our medium - term inflation aim after the worst of the crisis has passed and the euro area economy begins its journey to economic recovery. faced with an extraordinary challenge, europe will need an extraordinary response. the eu budget can play a key role in mobilising the necessary resources and putting them to productive use. to do so, it will have to be ambitious – not just in size, but also in its priorities and its effective implementation. the european commission ’ s proposal for a revised multiannual financial framework and the next generation eu are decisive in this regard. and we should not forget that the largest supranational issuance in euro ever announced that is associated with the proposal could also have a positive impact on the international role of the euro. it will be important to adopt this package quickly. setting a clear timeline will give more certainty and confidence to citizens,

the european central bank was acting in response to what it saw as a recovery scenario for the euro area, as testified by the fact that it raised its benchmark interest rate by 25 bp on two occasions, in april and in july 2011, only to reverse these rises from november, in light of the worsening sovereign debt crisis. the forecasting error was also most significant in 2012 : in their 2012 spring projections, most institutions estimated a decline in gdp of around 1. 6 %, and ultimately it was 2. 9 %. overview as is addressed in the final chapter of the report, i should now like to take an overall view of the crisis. with regard to the regulatory and supervisory architecture of the financial system, we now have new arrangements underpinned by the european system of financial supervision and by the banking union in the euro area. new and more powerful regulatory and supervisory tools are at hand, including higher capital requirements, increased in the case of systemically important institutions, and the new instruments provided by macroprudential policy and resolution policy, also within the european framework. there is still work to be done with these arrangements, mainly the development of the third pillar of the banking union, comprising a common deposit guarantee scheme and the pooling of resources in the single resolution mechanism. the spanish financial system, for its part, has undergone most significant restructuring. this is reflected in the reduction in the number of institutions, mainly among savings banks, whose number fell from 45 to 10 institutions, 8 of which are currently banks ; and in the reform of the banking sector which, from 2008 to 2015, saw the number of offices fall by one - third and staff numbers by more than one - quarter. spanish banks are today better capitalised. deposit institutions ’ overall solvency ratio rose, in terms of capital relative to risk - weighted assets, from 10. 6 % at end - 2007 to 14. 5 % at end - 2015. from 2008 to 2015 the sector undertook a major clean - up of its balance sheets 11 / 14 through provisioning totalling almost €300 billion, close to 20 % of the total credit to residents at the time the crisis broke and to 28 % of gdp in 2015. at this juncture i should point out that, on reading these paragraphs, i am not forgetting the case of banco popular espanol. the report provides details on the results for this bank, and on the assessment made under the july 2012 memorandum of understanding with regard to our banks