in the financial and banking business in particular. the excesses seen in financial innovation and in overly expansionary credit policies have caused many of the current problems, whereby there will foreseeably be a back - to - basics movement entailing a clear reduction in total turnover in the financial sector. these characteristics of the crisis shape the two principal challenges that financial systems face today : reviving the flow of credit to economic agents, and the orderly restructuring of the financial system. let us analyse these two issues separately. the first and most immediate aim is that credit and liquidity should once again flow unimpeded towards companies and consumers. the resolute action of european central banks and governments since october has meant that illiquidity strains have largely been resolved in the financial sector. however, credit to companies and consumers has been checked by banks'mistrust, by the increased risk profile of borrowers and by the sharp decline in demand resulting from the slowdown in economic activity. the deceleration is proving particularly acute and credit growth has fallen from a rate twice that of nominal gdp before the crisis to around 5 %. and the prospect is that this trajectory will continue on the immediate horizon, with credit growth dipping to a zero or even negative rate. that generates a perverse effect which feeds back into the difficulties of both those demanding and supplying financing, making a global approach necessary : just as it is inconceivable that the current difficulties of the financial sector may be resolved if the downward spiral of the spanish economy is not curtailed, nor may it be assumed that the current situation can be plausibly overcome if the flow of credit were to seize up. nonetheless, the answer to restoring the flow of credit is neither publicly funded policies to purchase “ troubled ” ( impaired or toxic ) assets nor global and indiscriminate bank recapitalisation plans. while these measures have admittedly been adopted in many developed countries, they are not the most suitable measures for maintaining the flow of credit to the private sector, even if they have been of use in those countries that had to bail out systemic financial institutions. that does not mean they should be totally ruled out. but i am convinced they are of no use for resolving the problem of credit restrictions. the credit - boosting measures best suited to the current situation of the spanish economy are those aimed at improving the risk profile of both consumer and corporate transactions. this effect may be achieved through different means : e. g

26. 06. 2018 taking up of office by the governor of the banco de espana pablo hernandez de cos governor honourable ministers and authorities, ladies and gentlemen, dear colleagues and friends, i believe today calls, above all, for a round of gratitude. first, i wish to thank ministers calvino and montero for their presence here today. may they rest assured i am firmly committed to maintaining the close and loyal collaboration traditionally offered by the banco de espana to the ministries for the economy and finance. i also wish to thank the previous minister, roman escolano, for his presence at this ceremony, and for his proposal and defence of my appointment before the parliamentary committee for the economy and competitiveness. and my gratitude extends to the representatives of the committee accompanying us today. i undertake to make every effort to improve the capacity of the banco de espana to face the challenges addressed during the parliamentary committee hearing. ministers, as i am surrounded above all by colleagues, i trust you will allow me to continue in a more informal tone. as you know, including a three - year tour at the european central bank, i now have two decades behind me at the banco de espana. professionally speaking, this is, then, my home. it is a real honour for me to have been appointed governor. but, above all, i feel a great responsibility at having inherited the enormous legacy of an institution with the history, functions and position in the spanish economy of the banco de espana. i wish to begin this new stage thanking those people who have steered my career over the years. i have learnt from all of them and their teachings have been a source of wealth for me. my sincere thanks to all of them. thanks, of course, to jose luis malo de molina, under whose leadership of the research department i have pursued most of my career, and, among others, eloisa ortega and jose maria bonilla. they were most forthcoming with their trust and have, at different times, been a major source of guidance and support for me. thanks also to fernando restoy, above all for being a point of reference in terms of competence and dedication to public service. thanks especially to jose manuel gonzalez paramo, who oversaw my ph. d. and took me to frankfurt. that experience gave me, early on, a first - hand view of the work of the european central bank and of the banco espana ’ s potential as a member of the eurosystem. naturally, my greatest gratitude is