and monetary policy – are generating new patterns of funding, new players and changes in capital flows across global markets. those issues will be reviewed in the initial session. as i mentioned before, the euro area has to deal with a severe crisis which has led to the fragmentation of the european financial system. while there are signs of a certain reversal in this process, a failure in this respect would be particularly harmful for the european project, since integration is at the core of the european union itself. the policy actions of the ecb and other european authorities, including the decisive drive towards a banking union, have been able to overcome or dissipate the worst fears, but the road ahead is still long and difficult. finally, the role of central bankers should be highlighted in this new context. we are big players in the financial arena, both from the regulatory and monetary policy standpoint ; and the framework for our actions – and reactions – must necessarily change and adapt to the new environment. the renewal of the set of instruments to address the price stability bis central bankers ’ speeches mandate, be it in a situation of low growth, as happens to advanced economies, or in a situation of large capital inflows, as happens to emerging market economies, is one aspect of that change. the need to take on board financial stability considerations is another aspect widely discussed. you will devote the final part of the day to this quest. and i do not want to take more time out of the tight agenda you will follow now. thank you very much for your attendance to this conference. i wish all of you and excellent day and a good discussion. bis central bankers ’ speeches

at countering these pressures. i would like to briefly describe the developments in the main income statement captions and then identify the courses of action available. the net interest margin performed well in 2008 and its growth of around 14 % over the same period of the previous year was higher than that of activity. this favourable performance, despite representing a slowdown with respect to other years, reflects highly recurrent core income from banking activity, a characteristic of the spanish banking system. also, net interest margin growth was favoured by the high percentage of lending granted at variable rates, which allowed institutions to progressively raise interest rates in the first half of 2008. however, financial costs also grew strongly, and may continue to do so in the future. the higher pressure from funding costs has three sources. first, the notable increase in risk premia, in a very sharp pendulum swing, has surely over - corrected the abnormally low levels reached in summer 2007, so these levels will foreseeably not be regained when conditions in the international financial markets return to normal. second, the persistent difficulties in obtaining funding on the wholesale markets, which are also unlikely to regain the rate of expansion seen in the past, have led to notably heightened competition for new deposits, particularly time deposits, the cost of which is higher than that of other alternative sources of funding. lastly, it should be recalled that in a setting of low interest rates, the cost of bank deposits has a floor, and this also contributes to the narrowing of margins. for these reasons, the net interest margin will foreseeably come under downward pressure in an environment in which it is not, and will not conceivably be, offset by increases in the volume of activity. fees and commissions fell slightly in absolute terms. firstly, analysis of the various components of fee and commission income shows that those directly related to more traditional banking activity have, in line with their lower rate of expansion, grown more moderately. secondly, spanish deposit institutions have been marketing non - bank financial products and securities services to their customers, which has generated significant fees and commissions. however, the data for december 2008 reflect a fall in fee and commission income from business of this type. this is because the difficulties besetting financial markets have made these products less attractive to customers and because institutions have changed their product mix. it thus seems that their customer sales focus has moved from fee - generating products which they themselves market, such as pension and investment funds, certain insurance products, etc. towards deposits.