03. 06. 2019 a framework for the ccyb opening address at the second financial stability conference ( banco de espana / cemfi ) pablo hernandez de cos governor ladies and gentlemen, good afternoon. it is a pleasure for me to welcome you to the banco de espana to participate in the second financial stability conference. as in the first edition, this event has been jointly organised by the banco de espana and the centro de estudios monetarios y financieros ( cemfi ). so allow me to start by expressing my gratitude to the organisers, in particular rafael repullo, director of cemfi, and to all the members of the scientific committee, responsible for promoting the conference and selecting the papers included in the programme. let me also thank the keynote speakers, agustin carstens and lars peter hansen, for their willingness to attend. and also the rest of the speakers, the discussants and, of course, the participants in the panel. it was difficult for the scientific committee to select the eleven papers that will be presented in these two days from the more than one hundred submissions received. in the end, in my view, a good balance has been reached in the programme. it combines excellent academic papers that will provide interesting insights into theoretical and empirical developments related to financial stability with policy issues on the most practical aspects of the organisation and governance structures of macroprudential policy. i have no doubt that, in these two days, both supervisors and financial stability policy - makers will have a constructive and enriching dialogue with academia on macroprudential policy. macroprudential institutional framework in spain : the creation of amcesfi the timing of the conference is particularly important for us, since our new macroprudential institutional arrangements have just been set up. in early 2019 the spanish macroprudential authority – financial stability board ( amcesfi by its spanish acronym ) was created. its main goal will be to contribute to the promotion of coordination and the exchange of information on financial stability issues among the banco de espana, the ministry of economy and enterprise, the spanish national securities market commission and the directorate - general of insurance and pension funds. such an institution provides spain with a structure similar to that of other eu member states, in line with the recommendations issued by the european systemic risk board and the imf. in parallel, the supervision of the financial system was reinforced, extending the range of macroprudential tools available to the sector

momentum of the european economy, the attempts of public authorities to alleviate its most painful effects on society and the consequences of states ’ efforts to avoid the collapse of the financial system. how have these three successive phases affected the spanish banking system? spanish banks held up reasonably well in the first phase of the crisis. on various occasions, the reasons why they performed differently have been pointed out. on the one hand, their business is “ traditional retail banking ”, which hardly involves structured products that can ultimately become “ toxic ”. on the other, spanish banking regulation and supervision retained its conservative stance and did not follow the international trend which advocated low - intensity regulation and supervision. well - known examples are “ dynamic provisions ” and the compulsory consolidation of any “ off - balance - sheet structure ” that might involve a risk. nonetheless, our banking system has not been insulated from the consequences of the crisis. the sector built up imbalances during the long twelve - year expansionary period of our economy from 1995 to 2006. the interplay of these sectoral imbalances, which began to be tackled at end - 2006 with the outbreak of the international crisis, suffices to explain the resulting impact. on the assets side, there was a strong, sustained increase in lending. coming in unison with one of the defining features of the spanish economy ’ s growth pattern, the exposure to real estate developers turned out to be excessive, all the more so considering that it is a highly cyclical activity which is currently contracting sharply. in this respect, it should be pointed out that in spain there are fundamental differences between credit for real estate development and that extended to households for house purchase. thus, while the former shows, as i have said, pronounced cyclical behaviour, retail mortgage lending is the type of credit which has the lowest default rates during recessions. this is so not only now, when the doubtful assets ratio for deposit institutions as a whole stands at 2. 5 %, approximately 3. 5 pp below that of credit to the private sector, but also in the past. for instance, in 1993, when the unemployment rate amply exceeded 20 % and interest rates were substantially higher than at present, the doubtful assets ratio for house purchase loans was approximately 4. 5 pp lower than that for total credit to the private sector. the retail mortgage business in spain is characterised by its simplicity, by having avoided innovations that tend to lower banks ’ incentives to manage borrowers properly, and by the incentives to build relationships