because of their monetary policy function, central banks have an indepth knowledge of the financial system. they are independent anchors for monetary stability. they also have a clear interest in financial stability because of its beneficial impact on the macroeconomic environment. and, last but not least, central banks are the ultimate source of liquidity. for all these reasons, central banks often have an explicit mandate in the area of financial stability. but typically this mandate is formulated in very general terms, and it would have been written before growing recognition of the key role of macro - prudential oversight. financial stability is not and cannot be exclusively an issue for central banks, namely the ecb and the european system of central banks. it must be shared with micro - prudential supervisors. they have a key role, because stable institutions are an essential and necessary condition for achieving financial stability. this is also the reason why the esrb and the esas will form together a european system of financial supervision ( esfs ). so in the analysis of systemic risk, the three esas will also have an important role to play, both on their own and within the esrb. in collaboration with the esrb, they will develop a set of indicators to identify and measure systemic risk. on their own, they will further draw up guidelines and recommendations for individual financial institutions to take account of the systemic risk they pose. and they will need to ensure that they have the capacity to respond effectively to emerging systemic risks. on the question of “ how ” to do macro - prudential oversight, the main tools that the esrb will have at its disposal are warnings and recommendations. as we know, the strength of the socalled “ soft law ” can be quite significant, notwithstanding the lack of direct enforcement power. when risks have been identified and appear to be large, the esrb will issue precise risk warnings. when appropriate, it will complement warnings with recommendations for remedial action and indications of the risks of inaction. we assume that the addressees will give careful consideration to the measures the esrb will propose. i am confident that the esrb will quickly develop its credibility through its work, its warnings and its recommendations. its authority will draw on the quality of its analysis and its deep understanding of the functioning of the financial sector. implications for the financial industry i have described the rationale for macro - prudential oversight and the practicalities of establishing the esrb. what are the implications for the financial

take action? could it still help to make this situation just a little more bearable for millions of europeans? yes, it could take action because it has a capacity of €410 billion. the circumstances are totally different to those of the debt crisis, but clearly an instrument with a capacity of €410 billion is of interest to us. do you think the spanish government ’ s plan is well targeted? do you think it will be helpful? i think so. the €100 billion of guarantees are very significant. the ecb has given banks all the liquidity in the world, one could say. but if the banks are not able to pass this liquidity on to their customers because they have doubts about their customers ’ creditworthiness, then it ’ s all for 1 / 3 bis central bankers'speeches nothing. i think the plan for €100 billion of guarantees is key here, because it ’ s a guarantee for everyone that the ecb ’ s liquidity will actually get to where it needs to go. so yes, this is very well thought out. another important issue is the measures to ensure that the situation regarding workers is flexible during this period. we are going to have a situation where many firms that were perfectly solvent are now struggling. so everything that helps workers, such as the temporary layoffs ( in spanish : expedientes de regulacion temporal, or ertes ) or reduced [ social security ] contributions, is a step in the right direction. overall, i think the government ’ s plan is the right one, it ’ s going in the right direction and i hope everyone supports it. thanks to its deficit, its indebtedness, spain has limited room to activate fiscal measures. given that this is an extraordinary situation, do you think that the eu should set aside the financial orthodoxy of recent years and move towards being more flexible? it ’ s already set it aside, hasn ’ t it? the eu has said that it is not going to apply the stability and growth pact, that there is an escape clause, so governments will be able to spend more. there will be a natural deterioration of public finances. but i say again, this is not like 2008, when there was a severe, long - lasting deterioration. now it ’ s about tackling an emergency, a health emergency, and acting as coherently as possible. the latest measures taken by the european central bank – you mentioned earlier the role your institution has to play during this