on the same period of 2022. overall, in the years following the covid - 19 crisis, the average cet1 ratio has been slightly more than 1 pp above the average ratio of the period between the end of the global financial crisis and the start of the pandemic. in any event, spanish banks ’ cet1 ratio is at the lower end of the distribution for european banks of different sizes and business models. but it is well ahead of the average requirements and offers good aggregate loss - absorbing capacity. final assessment over a broader timescale, it is clear that the solvency and liquidity of both the spanish and the european banking sector have improved substantially over the last decade. this has been driven, in part, by the internationally agreed regulatory reform, which in the european union applies to all banks, irrespective of size. indeed, the strengthening of the banking sector and the regulatory reform have proved vital to enable the sector to successfully overcome the extraordinary stress episodes of recent years. in spain, the fact that business models are strongly oriented towards the retail segment bolsters their capacity to absorb adverse shocks to wholesale market financing conditions and has enabled them to record a favourable financial performance of late, both in terms of higher profitability and improved balance sheet quality. however, confidence in our banking system must not allow us to overlook the existing risks, which remain significant in both the short and the long run. in the short term, the present situation, marked by the necessary increase in interest rates and the high uncertainty regarding growth and inflation projections, means that banks face significant risks in different balance sheet segments. at the net interest income level, the substantial improvements recorded by some banks cannot be considered long - lasting and it is reasonable to believe that, as the higher interest rate environment persists, their funding costs will likely rise further. the increase in the cost of funding may accelerate for banks, driven by the gradual reduction in eurosystem liquidity facilities, and their increased cost, and the developments seen in deposits, with depositors seeking better remunerated financial instruments and part of the savings buffers accumulated during the pandemic having been depleted. the continuation and / or heightening of the recent tensions in the global banking sector could also contribute to this increase. moreover, the value of fixed income financial exposures ( e. g. bonds, especially those with longer maturities ) has declined. in addition, credit quality, which remains highly resilient, may ultimately

32 %. that is to say, overall central government and social security spending in 2011 accounted for only 54 % of the total, while that of regional and local government amounted to 46 %. the picture given by the state and social security budget is thus necessarily incomplete in respect of overall general government spending. admittedly, prior to the presentation of the state budget, parliament and the senate have approved the budget targets, both for overall general government and for each of its sub - sectors, on the proposal of the government and following a report by the fiscal and financial policy council and the local government national board. yet clearly the budgets of each regional government and each municipality are approved separately, there being no document containing information on all of them, together with that on the state and social security budget. hence, although we do have ex - post information that enables the public spending outcomes and outturn for the four major spending groups – central, regional and local government, and the social security system – to be analysed, we do not have an ex - ante or prior document that provides a detailed analysis of budgetary projections for overall general government and its compatibility with the objectives set. it should be recalled, however, that the new budgetary stability law introduced substantial improvements in this respect. specifically, it stipulates that, before 1 october each year, regional and local government shall submit information on the essential items contained in their forthcoming budgets to the ministry of finance and general government. then, before 15 october, the ministry of finance and general government will release a report on the alignment of this budgetary information with the stability objectives, in such a way that the ministry may make recommendations should it perceive slippage. and, finally, before 1 april the following year, the minister of finance and general government has to submit a report to the government on the degree of fulfilment by all tiers of government of the objectives in the initial budget. i consider that these reports should in fact offer this complete picture of the budgetary projection that we are today lacking. i would further remind you that the government has announced the creation in 2013 of an independent fiscal authority to ensure compliance with budgetary regulations. this type of institution has proven useful in other developed countries in enhancing budgetary policy credibility. it is, however, crucial that such an institution should enjoy a degree of independence, effective responsibilities and resources in line with best international practices. i will now discuss the essential features of the state and social security budget for