longer viable due to post - covid changes in consumer preferences. but covid - related legacy debt should not be a reason for firms that are intrinsically viable to go out of business. in a market economy, normally bankruptcy is an important agent for renewal, but it is also a costly one. if applied indiscriminately and 2 / 3 bis central bankers'speeches unnecessarily, it is bad for employment, bad for creditors, and bad for the economy. so under the current circumstances, we should look for more targeted and less costly solutions where possible. that might involve corporate debt restructuring where banks and other private creditors, and also tax authorities agree to provide some relief. this could help stem the build - up of non - performing loans. that is why i welcome the commission ’ s npl action plan. what i like about the plan is that in addition to cushioning the blow for corporates and banks, it supports a european market for bad debt. it is good to see the progress that ’ s being made in several places and it ’ s important to take further steps here. this is a good moment to say something more specific about the banking sector. as insolvencies are expected to rise, banks will see their non - performing loans increase. fortunately, banks have strengthened their buffers in the preceding years and have taken provisions against the incoming covid impact. these now constitute two solid lines of defense. but still banks are bracing for impact. under these circumstances prudential authorities should monitor developments closely. there is a myriad of non - fiscal support measures in place at the moment, that enable the financial sector in continuing to provide credit to the real economy. a careful exit requires that we first get a clear view of what individual measures are in place and what the impact, both individually and in combination, would be if they were lifted. in other words, we should be able to look through the various kind of support measures, and be able to see what is going on below the surface of banks ’ balance sheets. for instance, what is the effect of the ifrs9 transitional arrangement on capital ratios? mapping the impact of non - fiscal support measures will help to design a smart exit path without material cliff effects, and should support authorities to provide clear guidance to financial institutions. only when the recovery is clearly underway is it time to start restoring the buffers in the economy that have been used to absorb the covid shock. this is the

. more generally, in these demanding times, moderation is of the essence in terms of both profit margins and wages. these measures should be accompanied by structural reforms that increase competition in product markets, particularly in services – including the liberalisation of closed professions – and, where appropriate, the privatisation of services currently provided by the public sector. at the same time, the governing council stresses that it is absolutely imperative that euro area national authorities rapidly adopt and implement the measures announced and recommended in the euro summit statement of 26 october 2011. we are now at your disposal for questions. bis central bankers ’ speeches