allow the greek economy to reap the full benefits of the firming and broadening euro area recovery. but still, we have seen progress. the situation of greek banks has improved in several ways since the summer of 2015 when the third programme was negotiated. capital adequacy, for example, has been strengthened from cet1 ratios of around 11 % in the third quarter of 2015 to around 16 – 17 % at the end of last year, following the successful recapitalisation of the four main banks in late 2015. bank governance has also improved, as shown by the significant changes in the composition of greek bank boards over the past year. and, importantly, bank profitability recovered in 2016 after years of substantial losses. the average return on assets improved from – 1. 9 % in 2015 to 0. 1 % in 2016, based on continued operations. 1 / 4 bis central bankers'speeches what, then, are the main obstacles that still need to be overcome? i would argue that they are mainly related to the fragile state of banks ’ balance sheets – on both the asset and liability sides. let me start with the asset side. as you know, non - performing loans ( npls ) are a problem in many euro area countries. but in greece 45 % of all bank loans are non - performing. they severely depress the profitability of banks and their ability to extend new, productive loans to firms and households. decisive and rapid action is therefore needed. the roadmap was drawn up last year when ecb banking supervision agreed with the four main greek banks on a 50 % reduction in their npl stock by the end of 2019. progress so far has been broadly in line with agreed targets, but npl objectives for this year and the next two years are ambitious. a step change in npl resolution activities will be needed – in particular after the weak performance in the first months of 2017 that was, in part, also due to the uncertainties related to the delay in the second review. but i am happy to see that the greek authorities recently passed several important pieces of legislation to support npl resolution. full and timely implementation of these reforms in the months ahead will be crucial to support the required step change in npl resolution efforts. let me highlight three elements that are of particular importance : first, the overhaul of the out - of - court workout framework. this element is of particular importance in greece, where many firms are heavily indebted both to banks

reserves has grown substantially in the last two decades. the development of malaysia ’ s international reserves has been under the media spotlight lately. it is important to note that speculation on the country ’ s international reserves, if not managed properly, can affect trust and confidence in the economy, financial system as well as its currency. the main purpose of international reserves is to serve as a buffer against external shocks. this reduces the likelihood of a balance of payments crisis, thereby preserving monetary and financial stability and orderly market conditions. the sheer magnitude of funds flowing between financial markets is now staggering. this is further complicated by the rapid pace at which these transactions may occur because of technological advancements. in such periods, changes in international reserves should respond accordingly. 2 / 6 bis central bankers'speeches but one area we should be mindful of is that reserves should increase and fall in an open financial market, serving as a buffer against potentially disruptive volatile financial flows. a decline in reserves during periods of capital reversal is not a new phenomenon. in contrast, during periods of capital inflows, it is natural for reserves to be accumulated. reserves play a role in both circumstances to manage adjustments in the financial markets. this includes ensuring the stability of the exchange rate is preserved. this is how we maintain orderly market conditions. malaysia ’ s level of foreign exchange reserves is adequate for our stage of economic development, domestic market structure and external position. malaysia ’ s reserves is well - within the adequacy range, placing us in a comfortable position relative to regional peers and fulfilling recognised global standards. malaysia ’ s long - term growth prospects also remain favourable. these are reinforced by both naturally occurring domestic economic trends and policy consideration, deliberation and action. malaysia will also continue to reap its demographic dividends and benefit from a young and productive population for the foreseeable future. as education and income levels continue to rise, an increasingly affluent and informed consumer group would emerge – providing additional impetus for economic growth. time and again, malaysian policymakers have continuously supported growth by removing structural impediments and promoting an enabling environment for new growth areas to flourish. strong banking sector and financial market that intermediate business needs. malaysia ’ s diversified and well - developed financial sector can intermediate the business and economic needs of the country, enabling businesses to flourish. malaysia ’ s banking sector is one of the strongest and most developed in asia. banks are wellcapitalised, with capital in excess of the minimum regulatory requirement of basel iii