tail scenario ( derived from a hypothetical systemic crisis, 5th or 10th percentile ) can be analysed. at the banco de espana we have used this methodology to analyse the impact on the effectiveness of different macroprudential instruments at the european level [ see galan ( 2020 ) ]. we can conclude from the results that the activation of the countercyclical buffer in financial cycle upturns gives rise to an easing in credit and gdp growth under the baseline scenario, but, above all, it significantly reduces the severity of the decline in gdp in an economic crisis situation. moreover, the probability of crises occurring diminishes. these effects would occur with a lag of around two years. the release of the ccyb in crisis periods would mitigate the adverse effects on economic growth, both under the baseline scenario and at the extreme percentile. and, furthermore, its impact would be immediate. in the case of the tools that fall on borrowers, their activation in financial cycle upturns would have similar effects to those of the ccyb. the main difference is that their effects are more immediate : i. e. around one year as opposed to the two years mentioned in the case of the ccyb. this suggests an order for the activation of the different instruments under normal circumstances : the tools that increase banks ’ capital requirements should be activated first and, if the risks identified do not abate, the second instruments should then be activated. according to this same evidence, it is found that the release of the macroprudential instruments that fall on borrowers in crisis periods does not significantly impact gdp growth expectations or their distribution. this is perhaps due to the fact that, habitually, it is the banks themselves that restrict these lending standards in contractionary phases. the macroprudential policy response to the covid - 19 crisis the outbreak of the economic crisis stemming from the covid - 19 pandemic posed an unprecedented challenge, and it did so too from the macroprudential standpoint. as i have attempted to convey in this speech, macroprudential policy was conceived to tackle risks that arise endogenously in the financial system and build up gradually over time. the pandemic has thrown up a radically different crisis scenario, caused by a risk factor exogenous to the financial system. but, in any event, it has had a sudden and profound macrofinancial impact. against this background, we must accept that

banks on reasonable terms. • purchases of assets held by the private sector started and large - scale purchases of sovereign bonds were started in march this year. • it is no secret that i am no supporter of the plan to purchase government bonds. although the first small signs of success are apparent, we must still remain vigilant about the accompanying risks. above all there is the moral hazard that would emerge were some government to lose its appetite for reform. the falls in interest rates provoked by the massive purchases of bonds will lower interest rates temporarily on government borrowing and this must not be used as an argument for pushing vital but painful reforms to some point far off in the future. interest rates are only favourable for a short time and will support governments while they are making bis central bankers ’ speeches changes. if governments were to ignore the budget rules agreed in europe and were to start to increase their debts further, the measures taken by central banks would be of very little help. the other main task occupying central banks alongside monetary policy last year was the launch of single banking supervision. starting supervision and carrying out a thorough and comprehensive assessment of the assets of european banks needed a lot of work from central banks and financial supervision authorities. the successful conclusion of this work let us say with confidence that the biggest and most significant banks in a range of countries in europe are now assessed and supervised on the same terms. in estonia, swedbank and seb pank have come under single supervision. the estonian economy looking more closely at the estonian economy, it can be seen that the growth in estonia in 2014 came primarily from the domestic market. • domestic consumption was lifted by rising employment, falling unemployment, and strong wage growth and a simultaneous fall in prices. the economy grew faster in 2014 than in 2013, but it should be remembered that no return to the growth rates seen in the boom years of the last decade is to be expected. • it may be hard to get used to the idea of lower growth rates, but economic truths cannot be denied. the estonian economy and estonian demographics are in a different phase of development now, and long - term sustainable growth is notably lower at 3 – 4 %. consumer price inflation in estonia fell below zero in june 2014 for the first time since the crisis. four years ago prices fell across a wide range of goods and services, but last year the fall in prices was mainly caused by cheaper energy and food. eesti pank is not forecasting any rise in prices this year, but rising