is the governance in order? regarding their ambition, unsurprisingly the reduction targets set by banks vary greatly, from 3 % to 83 % over three years. as you can no doubt imagine, we think that some banks ’ targets are not ambitious enough. to assess how realistic the banks ’ strategies are, we look at the timelines, for instance. in general, we don ’ t like strategies that simply defer reductions to later years. we also look at potential tools to be used, such as cures, sales or write - offs. here, we expect the strategies to be well diversified, not just focusing on a single tool. and there is another thing we need to take into account. how realistic a strategy is also depends on provisioning. does the foreseen level of provisioning support the strategy? could there be a disconnect between portfolios which are meant to be sold and the associated projected provisioning? given current market prices, these two elements might not always match. that said, we have observed a trend of increasing coverage. but dealing with npls also requires us to look to the future. once the balance sheets have been cleaned up, they should stay like that. that is why we have published a draft addendum to our guidance, which is currently the subject of a public consultation. this draft provides transparency for the banks as we lay out what we expect from them in general in terms of prudential provisioning for future npls. we are aiming for a structured dialogue. the starting point for this dialogue is defined by our general expectations and whether the bank concerned deviates from them. when the bank provides reasoning and evidence to back up this deviation, there is no need to consider supervisory action. but there might be cases where the reasoning and evidence is not convincing at all, and where we might still regard the provisions as insufficiently prudent. in such cases, we will consider taking supervisory action under pillar 2. and in that case, we would have a broad range of measures at our disposal. we might, for instance, require the banks to report, in detail, on the evolution of their npls ; to collect different information ; to re - evaluate the collateral taken in to cover the loans ; or to apply specific adjustments, such as deductions and filters, to the calculation of own funds. such actions are nothing new : they are part and parcel of a supervisor ’ s daily work. we have done a lot

luis de guindos : integration and convergence - from the peseta to the euro remarks by mr luis de guindos, vice - president of the european central bank, at an event in honour of the 40th anniversary of the spanish constitution, organised by the spanish ministry of economy, madrid, 18 december 2018. * * * this month marks 40 years since spain began writing the most optimistic chapter of its history1. on 6 december 1978 the spanish people did more than just vote in favour of a democratic country that would uphold the values of the rule of law and equality. our support for the constitution also laid the foundations for spain to modernise its economy and become an integrated part of the european family. in addition to safeguarding fundamental rights and civil liberties, section 38 of the constitution states that “ free enterprise is recognised within the framework of a market economy ” and confirms that the public authorities guarantee its exercise. in practical terms, this meant spain would align itself with the western model of parliamentary democracy, based on a market economy and free competition and underpinned by the social rule of law. a little more than a year later, negotiations began for spain to join the european economic community, a historic milestone that would be achieved in 1986. but this wasn ’ t an easy road to follow. the first years of our democracy were marked by economic difficulties, partly resulting from the international crises linked to sharp oil price increases and the lack of an anchor for inflation expectations in most developed countries. nevertheless, this new spain, democratic and integrated into europe, never stopped looking outwards. trade and financial flows and the movement of capital increased, and exports and imports rose from accounting for roughly 35 % of gdp in 1986 to 66 % in 2017. these steps towards modernisation would never have been possible without a society that was convinced of the fact that europe represented prosperity and the future. the pro - european nature of civil society united spaniards more strongly than their ideologies or political affiliations, and this sentiment has held firm despite the difficulties people experienced during the financial crisis. a recent survey by the elcano royal institute shows that eight out of ten spaniards believe that opening up markets provides spanish businesses with good opportunities2. this is resounding proof that spain benefits from the european union in general, and the economic and monetary union created by the euro area in particular. the annual growth in per capita income between 1977 and 1985, one year before spain joined the eu, was 0. 7 %, well below