##s, with no commitment to restructuring, seen elsewhere. the frob envisaged action on two fronts. on the one hand, it gave the banco de espana broad powers to take control of any institution that were to fail. and on the other, on what we could call the preventive side, it allowed financial support to be provided for the restructuring of viable institutions and their management teams, and helped them digest the process ; that said, the institutions themselves, and especially those that had experienced management failures, would have to bear the attendant cost. this meant that private sector solutions were prioritised, as has been seen in the processes that have unfolded in the past few months. today, it is fair to say that the restructuring and recapitalisation of spain ’ s financial institutions is well under way. it is now just a case of formalising and implementing the agreements reached. as a result, spain ’ s deposit institutions that did not already have sufficient capital have now secured it, either from the markets or from the frob. the banco de espana has conducted stress tests to verify that all institutions – banks, savings banks and credit co - operatives – will actually have sufficient capital available, not only for what would currently seem to be the most reasonable scenarios, but also for complex growth scenarios in the near future. accordingly, before end - june, the banco de espana will take the steps necessary to formalise the processes already agreed and to ensure they are correctly implemented. if, by month - end, any of these processes has failed, or any institution has been left behind, the bank will act, using the mechanisms envisaged for this purpose in the frob legislation. moreover, the bank intends to publish the results of these stress tests, to reveal the deterioration estimated, the consequent capital requirements and the capital funding committed, to provide the markets with a perfectly clear idea of the situation of the spanish banking system. thus, before the summer, the restructuring of the banking system should be complete, save for a legal reform allowing savings banks to obtain high - quality capital on the market, to meet the new basel standards. the government has the agreement of spain ’ s main opposition party for the successful passage of this legal reform through parliament. the restructuring and reform of the financial system, along with the budgetary adjustment, the public pension reform and the labour market reform, are the most urgent measures needed to restore confidence in the spanish economy, and, as such, should be passed

13. 11. 2020 the european response to the covid ‑ - 19 crisis opening address - fundacion internacional olof palme conference pablo hernandez de cos governor * english translation of the original speech in spanish why joint european action was / is necessary as in the rest of the world, the covid - 19 outbreak has triggered in the euro area a health and economic crisis that is unprecedented in recent history. against this backdrop, the economic policy response has had to be very forceful to mitigate the short - term economic effects and to prevent those effects from becoming persistent and affecting growth in the medium and long - term. the fact that this crisis is global also means that a coordinated response among the different countries is more effective both in combating the pandemic and as regards the capacity to facilitate economic recovery for all. the need for a coordinated response is particularly evident for european union ( eu ) member states, given the very high level of economic and financial interconnectedness. this is especially true in the euro area, because it shares a common currency, which increases both the economic benefits of joint action and the negative consequences of possible inaction. although the shock triggered by the pandemic is global, this crisis is affecting the eu unevenly, reinforcing the reasons for acting jointly at the supranational level. several dimensions of heterogeneity are particularly significant in this setting. first, the crisis associated with the pandemic is having a highly significant heterogenous impact at sectoral level. thus, the euro area countries that are being the hardest hit are those where the most affected sectors have a greater weight ( in particular those relating to services requiring greater social interaction ). second, the recent increase in national public debt levels is unprecedented. despite being widespread, this is having a more intense impact on the countries that were hardest hit by the crisis, some of which also had a less fiscal room for manoeuvre prior to the spread of the virus, which could limit the responsiveness of national fiscal policy. similarly, this uneven impact has interrupted the correction of the external imbalances recorded since the end of the financial crisis. specifically, the five euro area countries with a greater external imbalance measured by the net international investment position, i. e. the five countries with the highest level of net foreign liabilities, posted a tourism surplus of nearly 6 % of gdp in 2019. the impact of the pandemic on these flows, which largely came