that the more productive companies have gained weight in their respective sectors over the past decade, there are still certain obstacles limiting the efficient allocation of resources. specifically, there is a need to analyse the level of competition in sectors with persistently high profit margins. it would also be desirable to reduce the impact of factors preventing the most productive companies from growing. in this regard, the regulatory thresholds contingent on company size in the legislation need revising. making decisive progress on this structural reform agenda is crucial to increasing the economy's long - term growth and laying the foundations for a society that offers its citizens more opportunities. many of the policies i referred to earlier foster reductions both in the economy ’ s structural imbalances and in inequality, such that it should be possible to build a broad - based consensus for their approval, despite the obvious difficulties caused by the current political fragmentation. the challenges for the financial sector in the wake of the last crisis, spanish banks carried out a thorough process of balancesheet clean - up, recapitalisation and restructuring which, over the last four and a half years, has markedly improved the industry ’ s position on basic parameters, such as asset quality or levels of profitability and solvency. starting with asset quality, between december 2013 and june 2018 there was a very significant reduction in non - performing loans and foreclosed real - estate assets. similarly, return on equity returned to positive terrain with rates above the euro area average, recovering from its slump to - 25 % in 2012. for its part, the total capital ratio has increased by 1. 7 pp over the past four years, and the leverage and liquidity ratios are above the european averages. indeed, recent stress tests by the european banking authority and the banco de espana show spanish banks ’ solvency position gives them considerable resilience against adverse scenarios. nevertheless, even recognising the significant progress made in recent years, the spanish banking sector continues to face important challenges, which it largely shares with other euro area banking systems. the most significant of these challenges are : i ) speeding up the sale of unproductive assets ; ii ) strengthening capital and liabilities subject to bail - in ; iii ) improving the industry's reputation by avoiding the risk of misconduct ; iv ) confronting the challenge of profitability without undue easing of lending standards ; and v ) making progress in the use of new technologies, which, although they represent a major challenge for the 13 / 14 sector, at the

respect i think that the ecb is fully complying with its task. it would have been very negative if the european central bank had fallen into the temptation of forgetting its objective of containing inflation, attempting to alleviate the painful adaptation by households and firms to the very substantial increases in commodity and oil prices that we have experienced. fortunately, there is complete confidence that the ecb will ensure that inflation returns to its target level, and this is helping to somewhat reduce the uncertainty surrounding the financial system, growth and other variables. in the case of budgetary policy, one positive element of the spanish case is its favourable starting position. this is based on the notable budget surpluses recorded in recent years and on the sustained decline in the ratio of government debt to gdp to 36 %, a very low figure in comparison with other developed countries. this initial situation has made it possible for automatic stabilisers ( i. e. the reduction in revenues due to the slowdown and the increase in spending on unemployment as a consequence of the rise in the numbers of unemployed ) to be allowed to operate freely, providing a significant counter - cyclical component in the adjustment phase. moreover, this good starting point has, for example, avoided the need to react to the current losses of revenue by raising taxes, which would have certainly magnified the intensity of the adjustment. that said, the slowdown in spending is having a significant impact on tax revenue, reducing the budget balance very rapidly, so that utmost prudence must be exercised in fiscal and budgetary decisions. the need to provide the appropriate incentives means that it is advisable not to adopt widespread and permanent discretionary budgetary measures that attempt to counter the effects on households and firms of the inevitable reduction in national spending required by the adjustment process. measures to increase spending would, at best, enable activity to be sustained only temporarily and would not help to improve the prospects for expansion in the medium term. and i say at best because, without an improvement in external competitiveness, a large part of the increase in public spending would leak abroad and have only a minimal impact on domestic activity. likewise, strengthening control over current general government spending is an essential measure in response to a low - growth phase, since it limits the deterioration in the budget balance, signals stability and rigour to the private sector, and provides greater leeway to undertake public investment projects that enable the spanish economy ’ s productive base and competitiveness to be enhanced. it should also be remembered that, since the