are a drag on banks ’ profits and they keep the banks from lending to the economy. the issue needs to be resolved, but it cannot be resolved overnight. getting rid of npls takes time and effort. in march we published guidance for banks on how to deal with npls, and our supervisors are monitoring closely the strategies banks devise and the progress they make. still, resolving npls as quickly as possible requires the right structures. and here, governments could help by improving the legal and judicial systems. the price of npls depends largely on whether these systems are effective and efficient. the fourth item on my list is risk management. and in a broad sense that also covers internal models. after all, banks use these models to calculate risk weights for their assets, which then serve as the starting point for determining the right amount of capital. i think that risk sensitivity should be central to calculating capital requirements. but i also see that internal models have become very complex. and that makes them prone to error or even manipulation. 1 / 2 bis central bankers'speeches against that backdrop, we have launched a major project ; the targeted review of internal models, or trim, as we call it. with trim, we want to achieve two things. first, we want to harmonise the supervisory treatment of internal models and ensure a level playing field. second, we want to ensure that the results of internal models are conservative and driven by actual risks, and not by modelling choices. this will strengthen trust in the banks ’ calculation of risk and, ultimately, in the adequacy of capital buffers. thank you for your attention. 2 / 2 bis central bankers'speeches

peter praet : the euro area economy, monetary policy and structural reforms remarks by mr peter praet, member of the executive board of the european central bank, at the observatory group roundtable, new york city, 18 november 2016. * * * today i will give you an assessment of the euro area economy and share some thoughts on where i see us heading and on what is needed to ensure long - run sustainable growth. 1 on a positive note, we have good indications that the euro area economy is heading for a continued moderate, but steady recovery, which seems to have become resilient to global economic and political uncertainty. real gdp growth has expanded for the 14th consecutive quarter, growing by 0. 3 %, quarter - on - quarter, during the third quarter according to the flash estimate. the latest incoming economic indicators continue to point to similar growth rates for the coming quarters. although global uncertainties continue to weigh on the outlook for foreign demand and could thereby dampen export growth, robust domestic demand should partly counteract the negative impact on growth stemming from the external environment. solid domestic demand is anticipated to remain the driving force behind real gdp growth. consumption expenditure is expected to grow strongly this year and to remain buoyant thereafter. most notably, consumption is boosted by improving labour market conditions, with unemployment falling steadily despite a rise in participation. these improvements support the consumption expenditure of both existing employees, who are reassured of their earnings prospects, as well as new employees. moreover, euro area consumers are still benefitting from higher real disposable incomes, reflecting past declines in oil prices. business investment is also expected to continue recovering amid support from a number of factors, such as improvements in corporate profitability and a need to modernise the capital stock after years of low investment and physical depreciation. all these developments, of course, are gaining significant support from the effective pass - through of our accommodative monetary policy measures. taken together, our measures have led to a significant and broad - based easing in financing conditions for euro area firms and households, which bolsters consumption and investment expenditure. in terms of financing costs, since the beginning of june 2014, bank lending rates for euro area households and nfcs have fallen sharply, with even more pronounced declines for small and medium - sized enterprises ( smes ). corporate bond yields have fallen significantly, too, amid support from the corporate sector purchase programme ( cspp ), which began in june of this year