the singleness of the relevant legal framework for banking activity throughout the eu may become firmly anchored. to wrap up this first part of my speech, allow me to highlight certain relevant decisions taken by the supervisory board during this first year. among the most important are those relating to the supervisory review and evaluation process ( srep ), which has for the first time been carried out with a common methodology for all ssm banks. this process, which includes both quantitative and qualitative aspects, determines the risk profile of each significant institution, the sufficiency of its liquidity and solvency in terms of this profile and, finally, it sets the minimum capital levels to be maintained. the decisions on capital, the adoption of which for 2016 will be shortly formalised, will, for all the ssm ’ s significant institutions, entail average capital requirements somewhat higher than those of the previous year : around 30 basis points ( bp ), rising to 50 bp if the impact of the phasing - in of the capital buffers envisaged in european legislation is taken into account. bis central bankers ’ speeches as you will recall, in january this year a recommendation on dividend distribution policy was adopted in which banks were urged to keep conservative dividend distribution arrangements so as to preserve their solvency. this recommendation will be shortly reassessed. in turn, common criteria have been laid down for recurring decisions such as authorisations for the acquisition of qualifying holdings in credit institutions, assessment of fitness and properness of board members, or the requirements to be made in capital reductions and issuances. finally, i must highlight the relevant role played by the ssm in the management of the greek crisis. the ssm not only monitored the situation of the banks continuously, but, once agreement was reached between the european and greek authorities last summer, it was entrusted with determining the recapitalisation requirements of greece ’ s four significant institutions on the basis of a specific comprehensive assessment exercise, whose results were recently published. in the coming months, the ssm must ensure that the recapitalisation of these banks goes ahead as stipulated. 3. some challenges that said, and as i stated at the outset, the ssm has numerous challenges to face in the near future. i would like to mention four in particular. firstly, the microprudential policy stance sought must be clearly defined. the ssm, despite its exemplary start - up, is still under construction and its criteria, practices and

the time being. overall, when looking ahead, we see no significant evidence of underlying domestic inflationary pressures building up in the euro area so that inflation rates should develop in line with price stability. however, there continue to be upside risks to price stability, relating mainly to oil price developments and their potential to lead to second - round effects stemming from wage and price - setting behaviour. in order to avoid this, it is important that the social partners continue to assume their responsibilities. as regards the monetary analysis, monetary and credit growth remain strong despite some moderation over the recent past. these developments mainly reflect the stimulative effect of the low level of interest rates in the euro area. as monetary dynamics over the past year have mainly been driven by developments in the most liquid components of m3, this continues to signal upside risks to price stability in the medium to longer term. to sum up, the economic analysis suggests that underlying domestic inflationary pressures remain contained. however, upside risks to price stability over the medium term need to be monitored closely. cross - checking with the monetary analysis supports the case for continued vigilance with regard to the materialisation of such risks. against this background, longer - term inflation expectations need to be monitored closely. as regards fiscal policies, recent information and forecasts suggest little progress in reducing fiscal imbalances in the euro area. a timely and full implementation of consolidation commitments is essential. this will strengthen the confidence of investors and consumers in the soundness of economic policies. at the same time, it is essential to implement, in a strict and timely manner, the revised stability and growth pact procedures, which are soon to enter into force, so as to underpin the credibility of the eu fiscal framework. the governing council has repeatedly argued in favour of structural reforms to improve the potential for higher economic growth in the euro area. authorities are aware of the structural obstacles and have taken important measures to address them, but continued reforms will be needed in order to keep up with the unavoidable challenges arising from an ongoing deepening in the division of labour at the global level, rapid technological change and population ageing. it is important to explain to the general public that these reforms will progressively deliver higher growth and lead to more job creation, and that, as a result, our societies will be better off. over recent years, uncertainties surrounding the structural reform agenda in some euro area countries appear to have hindered the necessary improvement in the confidence of consumers and entrepreneurs.