, the governor ’ s closing address for the la granda courses. for an analysis of the impact on the financial markets of the various milestones linked to the eu recovery fund, see box 5 of the " quarterly report on the spanish economy ", economic bulletin, 3 / 2020, banco de espana. see also arce et al. ( 2020 ) and box 3. 4 of the 2019 annual report of the banco de espana for a discussion of the role of fiscal policy coordinated at european and international level in the current context. supply of safe european assets, facilitating the general functioning of financial markets and the specific conduct of monetary policy. references aguilar, p., o. arce, s. hurtado, j. martinez - martin, g. nuno and c. thomas ( 2020 ). “ la respuesta de la politica monetaria del bce frente a la crisis del covid - 19 ”, occasional paper, banco de espana, forthcoming. andreeva, d. and m. garcia - posada ( 2019 ). the impact of the ecb´s targeted long - term refinancing operations on banks ’ lending policies : the role of competition, working paper no. 1903, banco de espana. arce, o., r. gimeno and s. mayordomo ( 2017 ). making room for the needy : the creditreallocation effects of the ecb ’ s corporate qe, working paper no 1743, banco de espana, forthcoming in review of finance. arce, o., i. kataryniuk, p. marin and j. j. perez ( 2020 ). thoughts on the design of a european recovery fund, occasional paper no 2014, banco de espana. arce, o., m. garcia - posada, s. mayordomo and s. ongena ( 2018 ). adapting lending policies when negative interest rates hit banks ’ profits, working paper no 1832, banco de espana. arce, o., g. nuno and c. thomas ( 2019 ). “ the eurosystem ’ s monetary policy following the end of net asset purchases ”, analytical articles, economic bulletin 1 / 2019, banco de espana. bernanke, b. s., m. t. kiley and j. m. roberts ( 2019 ). “ monetary policy strategies for a lowrate environment ”, aea papers and proceedings, no 109

today consistently adjusts the value of all of its assets based on each asset ’ s contribution to diversification. consequently, for the time being we have decided instead to establish standard estimates of diversification that banks would apply. i know that many members of the industry have accepted that choice as prudent for now, but you have also stressed the need to move forward with an approach that is more consistent with the existing treatment of market risk and the emerging practices in operational risk management. we are ready to start this work as soon as it is possible. still, portfolio theory suggests that an obvious next step to further enhance the risk - sensitivity of the capital framework would be to incorporate calculations of diversification benefits into the framework. in the coming years, and we can start very soon, we look forward to working with banks, with banking associations such as the bba, and with academics and researchers to find ways to move basel in the direction of full credit risk models. likewise, the committee must continue to monitor developments in the industry to be prepared to harness other improvements in risk measurement and management practices. it is at once exciting and perhaps a bit daunting to think about the work ahead for all of us, whether on a national, regional, or global level. indeed, you need only to consider the energy and time that supervisors and the industry have already expended to prepare for the new basel accord to recall that great benefits can be reaped only from great efforts. while many challenges lie ahead, even more lie behind us that we have already overcome. thank you for inviting me to your conference today.