to highlight three : i ) those resulting from the far - reaching changes in the regulatory and supervisory framework ; ii ) those arising from the lower business profitability ; iii ) and lastly, those associated with restoring banking customer confidence in the wake of the reputational damage suffered during the crisis. i ) regulation the first main challenge facing banks is the need to adapt to the new european regulatory and supervisory framework. as i have said, spanish banks have successfully adapted to the new capital requirements, comfortably meeting the new limits established in the prudential regulations deriving from basel iii which have now been incorporated into spanish law and are to be gradually phased in. in addition, bearing in mind the present composition of spanish banks ’ balance sheets, no major adverse impact is to be expected from the upcoming introduction into european legislation of the new limits on liquidity and leverage. it is true, however, that certain requirements could become somewhat more demanding, as a consequence of the harmonisation of the different national applications of the european legislation being undertaken by the ssm and which could affect, among other things, the implementation schedules for the basel accord. in any event, even assuming immediate and comprehensive application of basel iii, the capital ratios of spain ’ s significant institutions would generally remain at relatively comfortable levels, although they would decline by more than the average for the institutions supervised by the ssm. it should also be noted that the work on the harmonisation of solvency ratios is not confined to the calculation of regulatory capital, but also includes measuring the total risks assumed ( the so - called risk - weighted assets ) on which the capital requirements are based. in this respect, spanish banks are somewhat better prepared than other euro area peers for an increase in supervisory demands. thus, according to the figures recently published by the banco de espana, 2 spain ’ s banks are among the group of institutions that apply the strictest criteria – owing to the lesser use of internal models and their higher conservative nature – to measure the risk - weighted assets used to calculate the solvency ratios. a key development that could play a significant part in shaping banks ’ balance sheet management policies is the forthcoming introduction of the minimum requirements for lossabsorbing capacity in the event of resolution of banks. these requirements, which are being analysed at a global level by the financial stability board and, at the european level, by the see the financial stability report, may 2015. bis central bankers ’ speeches european banking authority, aim to make it possible to handle the

recourse to the courts which could be time - consuming. also, courts sometimes fail to grasp the seriousness of the breaches of financial regulations. enforcing compliance with financial laws in the caribbean will need a change in regulatory culture and a strengthening of political will. i am hopeful, however, that this will happen since the high cost of the recent crises ( particularly cl financial ), has clearly provided ample rationale needed for much stricter enforcement of financial legislation. this is what comes from my crystal ball. in the course of your deliberations today there would be other views to which i anxiously look forward.