11. 07. 2022 welcoming remarks to the conference on econometric methods and empirical analysis of microdata in honour of manuel arellano pablo hernandez de cos governor good morning, and welcome to this conference on econometric methods and empirical analysis of microdata in honour of manuel arellano, one of our country ’ s leading economists and a key figure in the field of econometrics at international level. let me take this opportunity to, once again, congratulate professor arellano on all his important achievements. we are indeed very honoured at the banco the espana to have manuel with us at the cemfi. in his recent acceptance speech at the award ceremony of the king of spain ’ s prize for economics, manuel arellano argued that a nation without good administrative data is like a hospital system without access to advanced magnetic resonance equipment. i couldn ’ t agree more with this comparison. to have an accurate diagnosis of the problems of an economy it is crucial to be able to observe economic reality in sufficient detail. and, the analysis of an economy in high resolution is possible thanks to the empirical analysis of data, of microdata in particular, using, of course, the appropriate econometric methods. indeed, in recent decades, the analysis of microdata has revolutionised research in the social sciences1 and policy evaluation. the availability of granular data, together with the development of innovative econometric methods, has radically changed the way researchers approach and understand social issues. at the same time, economists are increasingly being given the opportunity to help governments design new policies and regulations2. and, in this respect, we should bear in mind that carefully designed scientific experiments have been an engine of economic, technological, and social progress. social experiments have become crucial to ensure that governments implement policies with a proven record of success3, that are based on evidence and not on prejudice or intuition. we are now in a position to create a virtuous circle that begins with the allocation of resources to the compilation of data and the provision of access to them, continues with the evaluation of public policies, and ends with the application of the findings to the design of policies. however, unlike medical trials, social experiments – large - scale, publicly funded randomised controlled trials – have not become the gold standard for the evaluation of public policy interventions. einar, l. y levin, j. ( 2014 ) " the data revolution and economic analysis ", working

significantly across euro area countries. exposures are highest among banks operating in countries with high household indebtedness, subdued household income prospects and / or where there is potential for a decline in residential / commercial property prices and also among banks that issued loans in foreign currencies that have now appreciated. the tools available to limit the exposure of banks to borrower credit risk are well known by this audience but i ’ ll list a few anyway : loan - to - value thresholds, debt - to - income thresholds, caps on the monthly repayment - to - income ratio. as regards the banks resilience, the current financial crisis revealed that fragmented microprudential supervision was insufficient to ensure a stable banking sector. since then some substantial changes have been made and are currently under way in financial regulation. these include a strengthening of micro - prudential oversight and, perhaps most importantly, the introduction of a complementary macro - prudential perspective. the role of the esrb the practice of macro - prudential oversight – the bird ’ s eye perspective on the financial system – was not yet sufficiently established in the period before the crisis erupted. in europe a key response to the crisis was the creation last year of the european systemic risk board ( esrb ) – an independent eu body responsible for the macro - prudential oversight of the union ’ s financial system. an important challenge for the esrb in its task of monitoring systemic risks and vulnerabilities is bringing this new macro - prudential perspective to the traditional microprudential one. this interaction is key, as the recent financial crisis painfully illustrated that financial institutions may be sound on a stand - alone basis while the financial system as a whole can still be exposed to serious risks and vulnerabilities. in the esrb this interaction is facilitated by the body ’ s composition which brings together representatives from both central banks and financial supervisory authorities from all 27 eu member states, from the european commission and the three european supervisory authorities. to prevent and mitigate systemic risks to the eu financial system, the esrb identifies and assesses risks and vulnerabilities and may as a next step issue risk warnings and / or recommendations if deemed appropriate. warnings and recommendations can be either public or private. they can be addressed to supervisory bodies, both national and european ones, as well as individual member states and the eu as a whole. the esrb gives the addressee of a recommendation a timeline for its implementation, and