as we all know, it has required a most considerable contribution of public funds. at present we are at a most advanced phase in the ongoing recapitalisation and restructuring of our banking sector. as you know, the starting point was in 2009, when the frob ( the fund for the orderly restructuring of the banking sector ) was created, and the process moved up a gear in 2011 further to royal decree - law 2 / 2011 on the strengthening of the financial system, which raised capital requirements. but the decisive steps were taken in 2012, with royal decree laws 2 / 2012 and 18 / 2012 on the clean - up of the financial system, the memorandum of understanding agreed in july with the european commission, and the financial support facility of up to €100 billion annexed to this agreement ; and, finally, law 9 / 2012 on the restructuring and resolution of credit institutions. against this background, each bank's capital needs were identified on the basis of a rigorous stress test and, in accordance with the european authorities, restructuring or orderly resolution plans were drawn up and approved for those banks requiring them. in 2012, backed by public financial assistance, the institutions classified under “ group 1 ” of the memorandum of understanding were recapitalised, and their problem construction and real estate development - related assets were transferred to sareb ( the asset management company for assets arising from bank restructuring ). into 2013, the “ group 2 ” institutions subject to the exercise have been recapitalised, their troubled assets have been transferred to sareb and the hybrid instrument management ( burden - sharing ) exercises have been conducted at all banks requiring them, except at one, where they began recently and will be concluded in the coming days. the public financial assistance to financial institutions in various forms of capital, since may 2009, has risen to €61. 37 billion, €38. 83 billion of which were under the financial assistance programme agreed with the european authorities. verification by the international authorities of the fulfilment of the conditions agreed in the july 2012 memorandum of understanding, the last round of which concluded only a few days ago, confirms that the memorandum and its deadlines have been strictly adhered to and that the main objective, the restructuring and recapitalisation of our banking system, has progressed satisfactorily. as earlier stated, the council of the european union will shortly approve the regulation governing the ssm, which will commence operating after a transitory period of one year. it is en

microprudential supervision in the euro area in autumn next year. there is virtual consensus around the conviction that the banking union will be a decisive instrument for breaking the loop between banking risks and sovereign risks, enabling the degree of financial fragmentation still prevailing in the area to be reduced and, we trust, ultimately eliminated. but to harness the full potential of the banking union, it is important to ensure the quality of the bank review exercises to be conducted before the ecb assumes its new supervisory responsibilities. but the banking union will not reach its full potential if progress is not made in the design of its other component parts, most notably a single resolution mechanism and fund, i. e. a harmonised or common procedure for the treatment of bank crises. spain i shall now turn to the situation of our economy. the spanish economy is showing signs of improvement, although the momentum for a sustained recovery remains weak. during the current year the rate of contraction of economic activity has eased, posting a quarter - on - quarter decline of only 0. 1 pp in the second quarter. the as yet incomplete data for the third quarter suggest that this improvement has continued in recent months, meaning activity in spain may have ceased to fall in the july - september period and may have even posted a slight increase, following two years of continuous declines. i thus believe it is not unwarranted to state that the spanish economy appears to be overcoming the second recession of this protracted crisis. several factors lie behind this change. undoubtedly, the pick - up in euro area activity has contributed, along with a highly favourable tourist season. but the sound course of exports, and to non - euro area destinations moreover, indicates that the most notable gains in competitiveness are contributing considerably to this improvement. the labour market figures for the past two quarters offer positive signs. they indicate that the pace of job destruction has been curbed along with a fall of 1 pp in the unemployment rate, bis central bankers ’ speeches which still stands at slightly over 26 % of the labour force. the greater momentum of hiring habitually seen in the summer months and the decline in the labour force have influenced these developments ; but they no doubt also reflect a favourable reaction by employment to the adjustment under way in labour costs. as the banco de espana has previously indicated and reiterated just a few days ago, evaluating the results of the labour reform approved last year requires prudence for two key reasons : it is a structural reform, whose effects, in any event, can only