/ 3 bis central bankers'speeches collateral pool. the imminent entry into force of the regime allowing state - guaranteed loans to be accepted as collateral will give banks even greater access to eurosystem financing. 2. 3 adaptation of prudential policy the ecb, acpr and banking supervision bodies ( the european banking authority, the basel committee, etc. ) have also decided to take account of the impact of the crisis by making intelligent use of the flexibilities that they have as supervisors in the implementation of the regulations : we have reduced certain capital requirements and called on banks to reduce their precautionary reserves. we sometimes hear the suggestion that this is an unjustified relaxation : it is precisely the opposite. it is for this sort of exceptional circumstance that the reserves of capital and liquidity were built up. this is indeed in the spirit of the regulation that they should be used now, in a countercyclical way. this equates to a temporary reduction in the minimum capital requirement of about 3 percentage points for french banks. we have also temporarily reduced certain workloads by postponing stress - tests and easing certain reporting conditions. in addition, the european commission recently proposed a series of targeted revisions to the crr, to provide a regulatory response to the crisis on top of the flexibilities granted to the supervisor. while preserving the resilience of the banks, there is a need to make some adjustments to the prudential framework, to limit some procyclical effects of the current crisis on the level of capital requirements. the proposed measures are a step in the right direction, although we would like, in line with the recent us decisions, to exclude state - guaranteed loans from the leverage ratio. together, they will enable banks to continue playing their full role in financing the economy, which is a prerequisite for a rapid economic recovery. the preliminary assessment published by the eba this week needs, of course, to be interpreted with caution. but it expects that the majority of european banks have sufficient capital buffers to absorb the severe shock of the covid - 19 crisis. the eba estimates the impact at between 230 and 380 basis points of cet1 capital. and with the aforementioned prudential easing measures, the banks have additional leeway. however, the earnings figures for the first quarter of 2020 already bear the scars of the economic difficulties and the shock to the financial markets. the earnings reports for the four main french banking

picture emerges. during the same period nominal wages grew by a total of 42 % in ireland and 52 % in greece vs only 7, 4 % in germany. the nature of the challenge, therefore, is clear. there has to be a regime change in the way nominal wages and prices are set in some parts of the euro area. as central bankers, we have been making that argument for years. one benefit of the crisis has been that this message is now fully accepted by governments and public opinions. strong reforms are currently being pushed in labor markets legislation as well as wage determination in the public sector in many countries. i ’ ll end up with a few words about the banking sector. i have the privilege to be both a central banker and a supervisor. from that vantage point, i will make four remarks : 1. revenues for the twelve biggest european banks have grown, in aggregate, by 8. 6 % in 2010 ( as compared, to 2. 5 % for the main us banks ). as a result, european banks ’ core tier 1 ratios stood at between 8. 5 % and 15. 3 % at the end of 2010 ( corresponding numbers for us banks are between 8. 4 % and 13. 3 % ). our “ universal banking model ”, based on a diversity of activities and sources of income is proving its resilience. 2. obviously there is a circular causality between government debt and the banking sector. spreads on public debt naturally act as floors for the funding costs of banks. and, conversely, doubts about banks solvency create expectations of public support and deterioration in public finances. this gives rise to multiple equilibria where sudden shifts in confidence can be self fulfilling and create difficulties which, previously, did not exist. this process has been at work in a number of cases in the euro area during the last year. 3. the main purpose of the stress tests is to break that circularity. our first european tests encompassed 81 banks vs only 19 for the us. the basic exercise was sound and taken as such by analysts when it was published. somehow clumsily, however, a few banks were added at the last moment, with only limited investigation, and these are precisely the banks which proved problematic afterwards, which undermined the credibility of the whole exercise. that mistake won ’ t be repeated. 4. a lot has been made of the fact that no sovereign stress was made on the banking book. and indeed, as regulators, we did not want