banks should persist with their early recognition policy, as this will enable them to continue to fulfil their task of providing funding to the economy. it is important that banks analyse situations individually, distinguishing between temporary and more permanent effects. automatic reclassifications that result in excessively procyclical behaviour should be avoided. however, above all, banks must be prudent, assessing provisioning needs in accordance with plausible and conservative scenarios for the coming years. in short, especially should the crisis be prolonged, banks must ensure timely and proper recognition of the effective quality impairment of their credit exposures in compliance with the supervisory guidelines. secondly, i wish to refer to the capital buffers built up and their use during this crisis. as i mentioned earlier, solvency levels are now significantly higher than in the run - up to the global financial crisis. at the start of this crisis, prudential supervisors decided to release many macroprudential buffers – the capital, countercyclical and systemic risk buffers – and, at the same time, the microprudential authority temporarily allowed banks to operate below the level set for certain structural requirements. these decisions sought to help banks continue to provide the financing that households and firms need in such an adverse environment as the present one. our empirical analysis shows that the use of these buffers will enable banks to provide more funding to the real economy. this in turn has a positive impact on economic growth, encouraging its recovery or moderating its decline. and this positive impact is such that it, in turn, boosts credit demand and banks ’ income, which ultimately translates into higher solvency levels. in any event, it is important to note that it may be difficult for banks to use buffers if they fear they may be penalised by the financial markets for reaching certain capital ratios, which would increase their funding costs and could, therefore, affect their solvency levels. this market stigma effect could lead banks to avoid using capital buffers, which in accordance with the above analysis would have a negative impact on the economy. 1 in addition, the use of these capital buffers may be more difficult if there are doubts about how they will be rebuilt post - crisis. the difficulty would be if banks were obliged to rebuild the buffers at a time when their capacity to generate profit was only modest or when the market might not be very receptive. in this setting, clear communication by the macroprudential and microprudential

##sation, more competition, a greater weight of the private sector in the economy, etc. to increase their growth potential. and, on the other, the countries with more inflationary tendencies should, as i said a couple of weeks ago in zaragoza, pursue their own structural reforms, reforming labour institutions, the rental market, etc. so that increases in demand, arising from relatively low rates, cannot generate inflation. the celebration of these ten years is taking place just as the global macroeconomic scenario has undergone a deep - seated change as a result of the financial crisis, leaving it covered in great uncertainty and powerful recessionary tendencies. now, those who are against a single monetary policy underscore the uneven impact that changes in the world economy can have on euro area members, as these are deprived of the macroeconomic stabilisation instrument that national monetary policies provided. once again, this is not an argument against emu but one in favour of accelerating structural reforms. but let us first highlight the huge benefits of emu precisely in the current crisis. can anyone imagine how the 16 euro area countries would have weathered the international financial storm had they retained their 16 currencies? anyone can appreciate the scale and seriousness of the financial problems these countries would have faced had each one retained its currency. remember what happened in the early 1990s when the effects of the us recession took some time to be felt in europe, but eventually did so with unusual virulence. amid the serious challenges arising from german reunification, the lack of a coordinated monetary policy response on this side of the atlantic then led to massive speculation against exchange rates and to a major foreign exchange crisis, which some did not hesitate to call the collapse of the european monetary system. this speculation ultimately imposed enormous costs for all the countries involved. this will not happen again now. at this time of enormous uncertainty, the key institution of the monetary union, the ecb, has reacted in an exemplary fashion. in the space of five months it has managed to reduce the euribor from 5. 3 % to 2 % through changes in monetary policy, despite the increases in spreads arising from the financial crisis. and it has further adopted a policy of unlimited liquidity provision, in coordination with other central banks, as illustrated by the agreements for liquidity provision in currencies other than the euro. the other european economic authorities have also reacted forcefully to support the financial system, to safeguard its functioning and to stimulate the various economies. amid these global difficulties, cooperation and