on the financial condition of households and enterprises and thus on their debt - servicing ability. at present, the bank makes only a broad qualitative assessment of this indirect impact in its published stability analysis. in order to assess the banking sector ’ s capacity to absorb the impact of adverse disturbances, the bank focuses on a number of developments in banks ’ financial condition and makes use of stress testing. the latter involves the bank asking banks to quantify the impact on their own funds and capital adequacy ratios of pre - specified adverse changes in the values of certain basic risk factors. the risk factors considered are the probability of default and the loss given default, interest rates, share prices and exchange rates. in addition, the bank is working towards developing a macro stress - testing framework, especially for credit risk. let me now move on to discuss issues related to basel ii, which represents a major change in the supervisory framework and a challenge to both supervisors and banks. before considering some implications of basel ii for the stability of the banking sector, i would like to refer to the preparations for basel ii implementation in greece and to the choices greek banks are expected to make between the alternative approaches for calculating capital requirements. a large majority of greek banks are expected to adopt the standardized approach in determining capital requirements for credit risk. however, a number of banks, comprising a share of around 50 % of the total assets of the banking sector, are reasonably expected to adopt the foundation irb approach for a significant part of their total portfolio. the bank of greece is encouraging banks to move to the irb approach because this approach will require an improvement in their risk measurement and management systems. thus, it will strengthen their competitive position and their capacity to successfully adapt to changes in the economic environment. for operational risk, although the majority of greek banks are expected to adopt the basic indicator approach to determine capital requirements, most of the large banks plan to adopt the more refined standardized approach. the bank of greece is working closely with the banks to help them prepare for the implementation of the new rules. in this connection, it has already put out 5 consultation documents dealing with issues where there is national discretion. these documents discuss measures which the bank intends to adopt as well as other matters requiring clarification and supervisory guidance. detailed consultations with each bank planning to use the irb approach have begun so that problems can be identified and resolved, while the preparations of banks intending to use the standardized approach will be reviewed at a later stage - sometime

firms and households remained solid, benefiting from the continued passthrough of our accommodative monetary policy stance to bank lending rates. the annual growth rate of loans to non - financial corporations increased to 4. 3 % in august, from 4. 0 % in july 2019, while the annual growth rate of loans to households remained unchanged at 3. 4 % in august. the euro area bank lending survey for the third quarter of 2019 indicates a slight easing of credit standards and increasing demand for loans to households, while demand for loans to firms remained broadly stable. our accommodative monetary policy stance will help to safeguard favourable bank lending conditions and will continue to support access to financing, in particular for small and medium - sized enterprises. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that an ample degree of monetary accommodation is still necessary for the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. in order to reap the full benefits from our monetary policy measures, other policy areas must contribute more decisively to raising the longer - term growth potential, supporting aggregate demand at the current juncture and reducing vulnerabilities. the implementation of structural policies in euro area countries needs to be substantially stepped up to boost euro area productivity and growth potential, reduce structural unemployment and increase resilience. the 2019 country - specific recommendations should serve as the relevant signpost. regarding fiscal policies, the mildly expansionary euro area fiscal stance is currently providing some support to economic activity. in view of the weakening economic outlook and the continued prominence of downside risks, governments with fiscal space should act in an effective and timely manner. in countries where public debt is high, governments need to pursue prudent policies and meet structural balance targets, which will create the conditions for automatic stabilisers to operate freely. all countries should intensify their efforts to achieve a more growthfriendly composition of public finances. likewise, the transparent and consistent implementation of the european union ’ s fiscal and economic governance framework over time and across countries remains essential to bolster the resilience of the euro area economy. improving the functioning of economic and monetary union remains a priority. the governing council welcomes the ongoing work and urges further specific and decisive steps to complete the banking union and the capital markets union. 2 / 3 bis central bankers'speeches we are now at your disposal for