time, subjecting all banks active in the markets to ifrss for consolidated accounts, certainly reduces its ability to exert an influence in this area. in short, the spanish experience shows both the usefulness and feasibility of an involvement of the supervisor that is compatible with the law in force. the need for this involvement is heightened by the entry into force in 2018 of the new standard ( ifrs 9 ) under which banks will switch from using the concept of incurred loss to that of expected loss in order to calculate the credit portfolio provision. this standard is undoubtedly an improvement on the current situation, since it enhances the measurement of the risks of loans and receivables. at the same time, it significantly increases the complexity of calculating provisions and, thus, increases the risk of heterogeneous application across banks, which is something the supervisor should be aiming to mitigate. the work under way in the basel committee on this matter is therefore very timely. my comments so far imply that there are in practice significant obstacles to satisfying the legitimate expectations that a rigorous and granular supervision will help moderate the intensity of the regulatory changes needed to promote financial stability. bis central bankers ’ speeches the regulatory frameworks in force and different supervisory cultures, along with the difficulty of becoming more involved in accounting practices, often place considerable limits on the intensity of supervision attainable. this explains why the actions of the authorities to prevent financial crises largely rest on the definition of clear and demanding prudential standards to underpin the work of supervisors. in the area of the ssm, these restrictions are particularly significant at the moment since, given the variety of supervisory practices and cultures in place, only adequate codifying of rules and procedures can help to ensure that banks are treated equitably, even if this means that some of the benefits, in terms of supervisory effectiveness, that an appropriate amount of discretion involve, have to be sacrificed. clearly, as the new european supervisory regime matures, we must strive to develop a specific action framework that incorporates the best practices and that is sufficiently robust to enable its application to be adapted appropriately to each specific circumstance. thank you for your attention. bis central bankers ’ speeches

range of instruments needed to tackle such situations with the speed required in each instance. finally, it is difficult for supervision to be effective if it does not include a thoroughgoing review of banks ’ financial statements. allow me to elaborate on this point. evidently, an essential aim of supervision is to oversee banks ’ solvency through the monitoring of capital ratios. insofar as these ratios are calculated on the basis of accounting information, it is essential to ensure that such information properly reflects the value of the bank ’ s assets and liabilities. it is true that auditors and securities supervisors also perform this task. however, the specific nature and complexity of bank business, the evident relationship between published financial information and financial stability, and the occasional lack of specificity of prevailing accounting principles all make it advisable that the prudential supervisor should contribute to encouraging supervised banks to follow the best practices, in full conformity with current regulations and the distribution of competencies among institutions thereunder. consequently, the effectiveness of the supervisory framework, which has doubtless been broadly strengthened by the changes to prudential regulation, depends on three aspects : firstly, the legal availability of a broad set of instruments through which requirements or restrictions may be imposed on banks ; secondly, the ability to effectively influence management decisions and policy through formally non - binding actions, and finally the ability to ensure the accounts give a fair view of the bank ’ s financial situation. true, these elements have largely been present in the supervisory framework in place in spain in recent years. the banco de espana has had a relatively extensive range of powers and has, in the exercise of its supervision, frequently used moral suasion and the issuance of recommendations, which banks have always followed. further, it has been empowered to issue accounting rules affecting individual statements, which banks and audit firms have used as a frame of reference to properly complete with the consolidated statements that, generally, must adhere throughout the european union to international financial reporting standards ( ifrss ). this supervisory approach is not identical to that followed in other jurisdictions. within the single supervisory mechanism ( ssm ), most authorities, including the ecb, have somewhat less extensive powers than the banco de espana. moreover, in various european jurisdictions, the supervisory strategy adheres to a greater extent than in spain to the strict bis central bankers ’ speeches use of the supervisory instruments formally recognised in the rules, with less dependence on recommendations or informal guidelines. for example, a recommendation, like the one made