non - financial private sectors in some countries. fourth, liquidity risk is increasing in the rapidly growing investment fund sector, with potential spillovers to the broader financial system. beyond systemic risks at the aggregate euro area level, we are also closely monitoring risks arising at the country and sectoral levels. targeted macroprudential policy measures are the appropriate policy instruments to address these country or sector - specific risks. as you know, responsibility for decisions on macroprudential measures in the euro area is shared between national authorities and the ecb. this means that we can top up the macroprudential measures taken by national authorities for those instruments that are envisaged in eu legislation. the ecb strengthened its role in macroprudential policy in 2016 and also took action to improve transparency – the governing council published its first macroprudential statement in december 2016. 3 besides the risks in some countries ’ real estate sectors, we noted that cyclical systemic risks in the euro area remained contained and, therefore, a broad - based increase in countercyclical capital buffers in the euro area was not warranted. this view was in line with the decisions of the national authorities, with whom we enjoyed excellent cooperation over the past year. transparency in the macroprudential policy domain was also enhanced by the launch of the new biannual ecb macroprudential bulletin in march 2016. our 2016 annual report also focuses on the actions necessary to overcome the legacy of the crisis in the banking sector. decisive action is needed at the sectoral, national and european levels. first, banks need to continue adjusting their business models to better cope with the low interest rate environment. as we show in a dedicated analysis contained in the report, the optimal strategy is likely to depend on each bank ’ s core characteristics. 4adjustments may include crossborder mergers and acquisitions where they allow efficiency gains. second, significant effort is needed to solve the problem of non - performing loans ( npls ). the extent and macroprudential nature of the problem calls for a comprehensive and coordinated response at eu level. while actions should be taken by stakeholders at the national level, these should be harmonised in a european blueprint for asset management companies ( amcs ), among the strategies to reduce the stock of npls on banks ’ balance sheets. the issue is also being addressed as a matter of priority from a microprudential perspective. 5 further enhancing the european financial framework turning now to

spring, we led a coordinated, comprehensive examination of 19 of the country ’ s see ben s. bernanke ( 2009 ), “ reflections on a year of crisis ”, speech delivered at ” financial stability and macroeconomic policy ”, a symposium sponsored by the federal reserve bank of kansas city, held in jackson hole, wyo., august 20 – 22. see board of governors of the federal reserve system, federal deposit insurance corporation, office of the comptroller of the currency, and office of thrift supervision ( 2008 ), “ interagency statement on meeting the needs of creditworthy borrowers ”, joint press release, november 12, ; and board of governors of the federal largest banks, an exercise formally known as the supervisory capital assessment program, or scap, but more informally as the “ stress test ”. this assessment was designed to ensure that these banks, which collectively hold about two - thirds of the assets of the banking system, would remain well capitalized and able to lend to creditworthy borrowers even if economic conditions turned out to be even worse than expected. the release of the assessment results in may provided sorely needed clarity about the banks ’ condition and marked a turning point in the restoration of confidence in our banking system. 5 in the months since then, and with the strong encouragement of the federal banking supervisors, many of these largest institutions have raised billions of dollars in new capital, improving their ability to withstand possible future losses and to extend loans as demand for credit recovers. meanwhile, we have also continued our efforts to ensure fair treatment for the customers of financial firms. during the past year and a half, we have comprehensively overhauled the regulations protecting mortgage borrowers, credit card holders, and users of overdraft protection plans, among others. in navigating through the crisis, the federal reserve has been greatly aided by the regional structure established by the congress when it created the federal reserve in 1913. the more than 270 business people, bankers, nonprofit executives, academics, and community, agricultural, and labor leaders who serve on the boards of the 12 reserve banks and their 24 branches provide valuable insights into current economic and financial conditions that statistics alone cannot. thus, the structure of the federal reserve ensures that our policymaking is informed not just by a washington perspective, or a wall street perspective, but also a main street perspective. indeed, our reserve banks and branches have deep roots in the nation ’ s communities and do much good work there.