time, subjecting all banks active in the markets to ifrss for consolidated accounts, certainly reduces its ability to exert an influence in this area. in short, the spanish experience shows both the usefulness and feasibility of an involvement of the supervisor that is compatible with the law in force. the need for this involvement is heightened by the entry into force in 2018 of the new standard ( ifrs 9 ) under which banks will switch from using the concept of incurred loss to that of expected loss in order to calculate the credit portfolio provision. this standard is undoubtedly an improvement on the current situation, since it enhances the measurement of the risks of loans and receivables. at the same time, it significantly increases the complexity of calculating provisions and, thus, increases the risk of heterogeneous application across banks, which is something the supervisor should be aiming to mitigate. the work under way in the basel committee on this matter is therefore very timely. my comments so far imply that there are in practice significant obstacles to satisfying the legitimate expectations that a rigorous and granular supervision will help moderate the intensity of the regulatory changes needed to promote financial stability. bis central bankers ’ speeches the regulatory frameworks in force and different supervisory cultures, along with the difficulty of becoming more involved in accounting practices, often place considerable limits on the intensity of supervision attainable. this explains why the actions of the authorities to prevent financial crises largely rest on the definition of clear and demanding prudential standards to underpin the work of supervisors. in the area of the ssm, these restrictions are particularly significant at the moment since, given the variety of supervisory practices and cultures in place, only adequate codifying of rules and procedures can help to ensure that banks are treated equitably, even if this means that some of the benefits, in terms of supervisory effectiveness, that an appropriate amount of discretion involve, have to be sacrificed. clearly, as the new european supervisory regime matures, we must strive to develop a specific action framework that incorporates the best practices and that is sufficiently robust to enable its application to be adapted appropriately to each specific circumstance. thank you for your attention. bis central bankers ’ speeches

##ertia in wage and price formation in spain associated with structural shortcomings in certain markets for factors, goods and services. another significant front is limited productivity growth, which is not only lower than in the united states but also than in most of the european countries. admittedly, low productivity gains can be explained in terms of the intense employment generation in the economy and of a composition of growth which, in recent years, has been largely based on construction and on services. but they nevertheless reflect low productive investment, a limited incorporation of technological improvements into the stock of productive capital and the relative lack of competition in certain segments of the economy. safeguarding a sound competitive position for the spanish economy is undoubtedly a priority for economic policy management within emu. as i have said, the activities most exposed to foreign competition have begun to feel the effects of the losses in competitiveness that have built up. and after squeezing their margins in recent years, they have begun to adjust their staff levels. competitive pressures are heightening, moreover, as new competitors emerge on the international scene with a similar specialisation pattern to spain and with a notable edge due to their low labour costs. in particular, the enlargement of the eu to 25 countries, while entailing the opening up of potential new markets for spanish products, means above all a substantial increase in competition. the spanish productive system must prove itself able to respond to this with dynamism, innovation and flexibility, as it has in the past when opening up to its external environment. the second source of risk lies in the patterns of financial behaviour of the private sector of the economy. it is well known that the strong growth of household and corporate demand has been accompanied by a notable rise in borrowing and in their debt ratios. although this has not led to any deterioration in the financial position of these sectors ( because their assets have also risen in value ) or to rises of the same magnitude in their debt burden ( thanks to lower interest rates ), their higher indebtedness has made them more vulnerable to adverse changes in economic and financial conditions. household debt cannot grow indefinitely at the rapid pace of recent years. the higher indebtedness and the increasing weight of floating rate loans, along with the rising share of equities and real estate in households ’ asset portfolios, have made their spending decisions more sensitive to interest rate and asset price movements, in a situation complicated by the limited disposable savings remaining after debt service. the property market is