flexible and forward - looking approach to financial supervision that seeks to motivate prudent management - and thereby complete the “ virtuous circle ” by encouraging further advances in risk management. the reforms underway are especially evident in the banking world under the basel committee ’ s “ basel ii ” framework. i should add that the international association of insurance supervisors ( iais ), a fellow association of supervisors in the insurance area, is now discussing a supervisory framework that would apply to all insurance regulatory systems globally. evolution in risk management and the reform of financial supervision should complement and reinforce each other, and the progress in each area will be influenced by the work underway globally to revise accounting guidelines. the geneva association has taken a great interest in this topic, so i will conclude my remarks with some brief thoughts from my perspective on the convergence of accounting standards, advances in risk management, and supervision. ii. trends across financial services sector allow me to begin with an overview of recent trends in risk management. last year, a body representing major financial supervisory agencies conducted a study of 31 banks, securities firms, and insurance companies in 12 jurisdictions. this body - called the “ joint forum ” - consists of expert supervisors from member agencies of the basel committee, the international organisation of securities commissioners ( iosco ), and the iais. the joint forum seeks to identify best practices and develop guidance for activities across the financial services sector. in its report, which was published in august 2003, the joint forum identified two important and recent trends among large, complex firms engaged in banking, securities, or insurance, or in some mix of these activities. a. integration of the risk management function. one of the most notable advances in risk management across all three financial services sectors is the growing emphasis on developing a firm - wide assessment of risk. this constitutes the first trend in the joint forum ’ s report. improvements in technology and telecommunications have made it easier for firms to gather, collect, and analyse large amounts of data on their exposures and business activities efficiently and increasingly in near “ real time. ” to make the best use of firm - wide data, some organisations have established a dedicated risk management function to foster more highly integrated and systematic approaches to risk measurement and management. the risk management function typically promotes the use of common risk measures across business lines. it can then report the firm - wide risk data to senior management. reports may range from daily updates on “ value - at - risk ” trading positions to regular, if

. similarly, economic policy measures have enabled progress to be made on correcting the problems faced by the financial sector during the worst of the recent crisis. nevertheless, the recovery has also benefited from a series of factors exogenous to domestic economic policy with varying degrees of persistence. these factors include the role played by ecb monetary policy and the significant drop in the oil price between mid2014 and early 2016, and, until the end of last year, the improvement in external markets, in a context of a global economic recovery. however, the effect of these factors can be expected to taper in the future. the foreseeable loss of momentum by the expansionary effects of demand - side policies is also relevant. in 10 / 14 this context, it is particularly desirable for prominence to be given to a renewed reform drive, geared towards correcting the spanish economy's persisting vulnerabilities. fiscal policy i will first mention the fiscal policy situation. over the past decade the spanish authorities have had to make the fiscal adjustment needed to guarantee the sustainability of the public finances. this process has brought the budget - deficit - to - gdp ratio down from a maximum of 11 % in 2009 to 3. 1 % last year. despite this deficit cut, spain ’ s public accounts continue to show significant weaknesses. first, the european commission estimates the ( cyclically adjusted ) structural budget deficit to still be around 3 % of gdp in 2018, the highest in the euro area. second, although government debt is on a slightly downward path from its historical peak of 100. 4 % of gdp in 2014, at around 98 %, it is still very high. the empirical evidence reveals that maintaining a very high level of public debt for a prolonged period tends to hamper economic growth as it becomes a source of vulnerability and reduces the scope for the public budget to act as a stabiliser in the event of a recession. the simulations made in a number of papers published by the banco de espana show that, on realistic assumptions, the process of reducing spain ’ s government debt will be very gradual. it may even take several decades to reach a debt - to - gdp ratio of 60 %, which is the reference value in europe ’ s current fiscal rules. in the light of these considerations, priority should be given to taking advantage of the current favourable economic context to reduce the vulnerabilities deriving from the public finances and create budgetary room for manoeuvre with which to address future crises