others as a consequence of the fresh outbreaks of the disease. in this context, the euro area outlook remains highly uncertain and the risks to the area tilted to the downside. at the same time, there are already signs that the pandemic may give rise to certain structural changes, although the full extent of these is, for the time being, difficult to know. in this context, for me the key for economic policies is to strike the right balance between supporting the recovery and spurring economic adjustment to the structural changes that will emerge after the pandemic. this means first maintaining support measures and avoiding cliff - effects. indeed, after the pandemic many euro area countries will be facing the highest level of public debt in many decades. and facing this challenge will require a gradual fiscal consolidation programme once the economy moves back onto a sound growth path. in the short run, however, the damage caused by the premature withdrawal of support measures would exceed the possible cost of maintaining them until the recovery shows signs of sufficient strength. notwithstanding, given the significant heterogeneity of the effects of this crisis, in particular in this recovery phase, support measures should be much more focused now and their timing adjusted to the duration of the crisis. in addition, we have to adjust the specific instruments used. in particular, the crisis has already generated an increase in the level of indebtedness of many firms. thus, it would make sense to assess the possibility of actions to support firms that do not involve an increase in financial obligations, such as, for example, by means of direct assistance or, in some cases through temporary capital injections. furthermore, for companies that have difficulty meeting their financial obligations, streamlined debt restructuring procedures need to be available to avoid such difficulties leading to the disappearance of heavily indebted firms whose business model is nonetheless viable. and, in parallel, for firms with non - viable business models, an orderly market exit should be available, since this would result in a more efficient allocation of resources. apart from these short - term actions, an ambitious structural reform agenda is urgently needed, to increase the economy ’ s potential growth, which was already low before this crisis. and this is also true for european policies. in this case, for example, it is crucial that the european fund be converted into a permanent, common fiscal stabilisation instrument for the euro area. this would allow a joint fiscal response to macroeconomic shocks and provide a larger supply of safe european assets,

the second pillar, the stress test, began in may and will evaluate the ability to maintain adequate solvency levels under stress, using the methodology agreed by the ecb and the european banking authority. this process will conclude in september and the publication of the results of the whole exercise is expected in late october. after this disclosure, those banks facing a capital shortfall will have to submit their recapitalisation plans to the ecb. i would like to say that, as we all know, the spanish financial system has undergone intense restructuring and recapitalisation, as well as a significant consolidation process. i am confident that spanish banks are prepared for this rigorous exercise. setting up the single supervisory mechanism and making it operational is not going to be a simple task. both from the procedural and organisational standpoints, it will be a complex process, requiring great effort, and will be a major responsibility for those who take on the leadership of this new european union - wide institution. bis central bankers ’ speeches ms sabine lautenschlager ’ s responsibilities as member of the executive board of the european central bank and vice - chair of the supervisory board of the ssm place her in a unique position. i have no doubt that her intervention will be extremely interesting and informative to us all. bis central bankers ’ speeches