payment discipline has been adversely affected. what follows is that there is an urgent need for implementing legislation that speeds up private sector debt restructuring. this does not necessarily mean that this legislation will lead to a widespread increase in foreclosures. what matters is that sufficient incentives are in place for borrowers and lenders to collaborate in case of repayment difficulties and to work out solutions acceptable to both borrowers and lenders. in addition to a strong private sector debt restructuring framework, banks will also have to step up their efforts to reduce their npls in other ways. for example, banks will have to further enhance their operational capacity to manage npls, and to become more alert in identifying prospective npls. addressing the high levels of npls needs to be embedded in a broad structural reform strategy, building on what has already been done under the programme. regarding property markets, there is an urgent need for stepping up the reduction of the backlog of title deeds and streamlining their issuance process. this is a very important area given its significance for restoring demand for property and reducing the cost of credit. securitisation could be used to offload the risk to specialised investors, if the legal framework is established to facilitate the transfer and work - out of bank assets. bis central bankers ’ speeches in addition, fiscal policy should continue on the path of consolidation, which is needed to ensure fiscal sustainability, consolidate access to international capital markets and further restore confidence in the cypriot economy. this should be complemented with measures to make the economy more efficient and attractive to domestic and foreign investors, such as reforming public administration, improving corporate governance and privatising state - owned enterprises. experience shows that reforms pay off. and other euro area countries that have implemented reforms in recent years are now starting to reap the benefits. conclusion ladies and gentlemen, a healthy and well - functioning banking system is indispensable for a sustainable economic recovery. unprecedented steps have been taken to strengthen the banking sector, both in the euro area and in cyprus. the successful completion of the comprehensive assessment creates the potential for credit supply constraints to diminish, supporting the economic recovery. the ecb will play its part by enforcing a strict, fair and harmonised supervision of euro area banks. it is, however, essential that the progress achieved so far in the restructuring of the banking sector is accompanied by the completion of legislation that would facilitate incentives for borrowers and lenders to cooperate. this means reforming the legal framework for private

benoit cœure : laying the foundations of the cypriot recovery keynote speech by mr benoit cœure, member of the executive board of the european central bank, at the 10th cyprus summit “ current developments in the euro area ”, nicosia, 4 november 2014. * * * ladies and gentlemen, today is an important day for the ecb and the euro area. the ecb has become the banking supervisor for the euro area, directly supervising 120 significant banks, including four banks based in cyprus. this marks the single biggest step in european economic integration since the inception of the euro. we are ready for this step, but we are also very well aware of the important additional responsibility we will be taking on. the economic and financial landscape is changing, not only in the euro area but also here in cyprus. since the start of the international financial assistance programme, important steps have been taken to stabilise and restructure the banking system, correct macroeconomic imbalances and create the conditions for a renewed economic recovery. my main message today is that a healthy and well - functioning banking system is crucial in this regard, both in the euro area and in cyprus. but let me begin by saying a few words on the economic situation in the euro area. i ask for your understanding that my remarks on the economic outlook should not be construed as providing indications on the perspective monetary policy stance of the ecb, as we are in the so - called quiet period, during which the members of the governing council refrain from comments on the current outlook for monetary policy. the legacy of the crisis weak demand, high debt and unemployment - continues to weigh on the pace of growth. unless an adequate mix of monetary, fiscal and structural policies is in place to create confidence and sustain private consumption and investment, we once again run the risk of a self - fulfilling loss of momentum and a delayed recovery. from our side, we are fully committed to play our part in this policy mix, which is to fulfil our mandate and bring inflation back towards 2 %. but it is also clear that our monetary policy stance can only have its full impact on the real economy if the banking system is in good financial shape. let me therefore turn to a key step we are currently taking which will support that process : the ecb ’ s comprehensive assessment of bank ’ s balance sheets. the comprehensive assessment the comprehensive assessment was one of the pillars of our preparatory work before taking over banking supervision. it involved over 6,