the banks and improves the stability of the financial system. finally, it is my view that, over and above the formal standards and protocols, the really important thing is cooperation and communication in good faith between supervisory colleagues. cooperation is, therefore, a two - way street, and i believe that we all understand that we need to accept a minimum level of flexibility, based on mutual trust and reciprocity, if we want cooperation between supervisors to be effective. basel ii implementation : other aspects turning now to the other topics currently being discussed, i would like to mention pillar 2 of the revised framework as an aspect which is receiving increasing attention. concretely : the group is currently exchanging views on how this pillar can and should be applied consistently within an international banking group. as we can see, the question of cooperation among supervisors is not limited to the use of advanced models under pillar 1, and it is thus necessary to be able to exercise this degree of flexibility as regards the nature and scope of such cooperation. there are also certain topics on which it would be desirable that both banks and supervisors move forward more decisively. for example, as regards operational risk and the so - called hybrid approach which sets out how the capital requirement for operational risk calculated as an aggregate using advanced models ( ama ) can be distributed or assigned within a banking group - we as supervisors find ourselves in a situation where it would be advisable for us to take steps to clarify some aspects of this approach, but where we need the industry to make clearer progress in developing concrete assignment models. there are other eminently practical topics that are being discussed by the aig. without wishing to provide an exhaustive list, i would just like to mention that it is examining the material effect, in terms of capital, of the differences that continue to exist in some jurisdictions on subjects such as the definition of default. the group is also engaged in an exchange of views on how to interpret “ user testing ” and so - called “ lgds in stress situations ”. the aig is attempting to establish the circumstances in which all these differences may be acceptable, when they affect different entities within the same banking group, and under what circumstances it would be appropriate to standardise the treatment of some of them. another practical aspect of implementation relates to the growing use by a number of institutions of external models and databases, known as “ vendor products ”. the committee has recently published a newsletter clarifying supervisors ’ expectations in terms of the requirements to be met in

24. 05. 2017 welcome address i conference on financial stability / banco de espana - cemfi luis m. linde governor good morning ladies and gentlemen, it is my pleasure to welcome you to this first conference on financial stability, jointly organised by the banco de espana and the centro de estudios monetarios y financieros ( cemfi ). thank you very much for your interest in and attendance at the conference. we have a very interesting agenda for today and tomorrow, structured around six sessions and a panel discussion covering a wide range of topics related to the theory and policy practice of financial stability. this event is bringing together distinguished speakers and discussants from central banks, international financial institutions and academia - a combination which will offer a diversity of perspectives and also ensure a lively and, for sure, interesting debate over the next two days. this conference has been possible thanks to the joint effort of banco de espana and cemfi. i am very grateful to the organisers, in particular to rafael repullo, director of cemfi, as well as to all the members of the scientific committee responsible for promoting this meeting and selecting the papers to be presented in the programme. this event has aroused particular interest among researchers, with - i am told - nearly one hundred papers having been submitted for just twelve slots. with this auspicious start, i trust this conference may become a regular forum of dialogue between researchers and policy - makers : central banks and financial supervisory authorities have many things to learn from the research carried out in academia, away from the frequent policy - making urgencies that drive the daily workload in our institutions. financial stability and macroprudential policy the last crisis generated a good deal of issues to be dealt with by authorities with a role in financial stability. the experience gained over recent years has shown the importance of safeguarding the stability of the financial system as a whole. we now understand that this ambitious task requires the use of sophisticated analytical tools to identify vulnerabilities at an early stage and anticipate how potential shocks can propagate across the financial system. to this end, both micro and macroeconomic methodologies can offer valid insights, and this is why the conference programme intends to offer a mix of both approaches. one of the most relevant and obvious legacies from the crisis is the introduction of a fullyfledged macroprudential policy framework. as we all know, macroprudential policy has, essentially, a