luis m linde : profile of professor nicholas bloom – winner of the xii german bernacer prize opening remarks by mr luis m linde, governor of the bank of spain, at the xii german bernacer prize ceremony, madrid, 24 september 2013. * * * ladies and gentlemen it is a great pleasure for me to introduce this award ceremony for the 12th german bernacer prize. first of all, let me once again thank the organizers and sponsors of the prize. they have established an excellent programme to support economic research in the fields of macroeconomics, monetary policy, and financial economics. this is the 10th time that the bernacer prize award ceremony has taken place at the banco de espana. the continued support and backing of this initiative of the observatory of the european central bank by the banco de espana is justified by its conviction of the importance of macroeconomic research, insofar as it concerns the functions to be performed by the european system of central banks. by recognizing the relevance of a prize like this, which has been awarded, in every instance, on the basis of academic excellence, the banco de espana reaffirms its commitment to economic research. as many of you know, this prize commemorates a distinguished spanish macroeconomist who worked at the banco de espana, as director of its research department, during the 1930s. despite the isolation of the spanish economics profession at that time, german bernacer obtained substantial international recognition for his research contributions. in this edition, to the very illustrious list of previous winners of the german bernacer prize, we add, with all due merit, professor nicholas bloom, a british economist, who is today professor in the economics department at stanford university. professor bloom graduated in economics from cambridge university, obtained his masters at oxford university and his ph. d. at university college london. he has been awarded the 2010 frisch medal of the econometric society, is a fellow of the american academy of arts and sciences and an associate editor of, among other journals, econometrica and the quarterly journal of economics and management science. he has published many articles on economic and management issues in top journals, including the american economic review, econometrica and the quarterly journal of economics. professor bloom ’ s two main areas of research are macroeconomic uncertainty and firm organization and productivity. in the first area, his main contributions are to show that macroeconomic uncertainty increases substantially in the aftermath of significant shocks. he also shows that during

and supervisory authorities to assign sizeable resources ; it will also involve the leading european audit and asset valuation firms. the ecb estimates that, not counting supervisory staff and bank employees themselves, more than 1, 000 people will work on the exercise. remember that the portfolios selected for the review amount to 58 % of the risk - weighted assets of the 128 institutions, i. e. some €3. 72 trillion, which will involve reviewing in detail an average of 1, 250 credit records per bank. in spain, we calculate that the review will affect assets valued at €663 billion, and will require the analysis of more than 21, 000 loan records. the second part of the assessment will consist of the stress test. the aim of this exercise is to analyse the ability of banks to maintain appropriate solvency levels in two different scenarios : a baseline or more likely scenario, and another alternative, highly adverse scenario, with less likelihood of occurrence. the stress test is being developed in collaboration with the european banking authority ( eba ). the methodology of the exercise is currently at the review stage following the finalisation some days back of the public consultation process. the final version of the methodology and details of the macroeconomic scenarios are expected to be published towards the end of this month. the implementation and quality control stages of the stress test will commence from next month, meaning there will be some overlap with the asset review exercise. the outcome of the comprehensive assessment will be made known in late october, and will include both the results of the asset quality analysis and of the stress test. as indicated on several occasions, the overall aim of the comprehensive assessment of banks is two - pronged : on one hand, the exercise seeks to offer a high degree of transparency concerning the situation of banks whose supervision will be conducted by the single supervisory mechanism as from november ; on the other, it intends to promote the recapitalisation of those viable institutions that show insufficient levels of solvency. both bis central bankers ’ speeches avenues will help reinforce the credibility of european banks ahead of the transfer of the supervisory function to the new authority. i should emphasise that it would be mistaken to quantify the value of the stress test in terms of the capital requirements it brings to light ; and even more mistaken to measure its success on the basis of the proximity of the final result to the relatively sizeable estimates in the analyses published so far which, often, have been lacking in information and rigour. experience shows that,