involved include signalling and influencing inflation expectations, exploring spill - overs resulting from investors using the cash received to buy other assets, including foreign assets with influence on the exchange rate, and finally, the freeing up of space in banks ’ balance sheets to increase credit to the real economy. therefore the counter bis central bankers ’ speeches argument that the policy would not be effective on account of already low sovereign yields is not well founded. the transmission goes well beyond the direct effect on the yields of the purchased securities. even less valid is the argument that sovereign bond purchases, should these be deemed necessary, would ease the pressure on governments to do structural reforms. it is not the task of a central bank to exert more or less pressure on governments to adopt policies for which they are responsible. central banks deserve their independence on account of their responsibility for price stability in a symmetric way, which means in both directions. with this huge challenge that monetary policy faces, a continuing accommodative stance is warranted as we have indicated in our forward guidance. at the same time, we see a worldwide trend for some froth in financial asset markets. even in europe, where the trend is less marked, we have some asset segments of “ localised buoyancy ”. however, monetary policy cannot address the problems inherent to the financial cycle, especially in the present situation. this is the role of macro - prudential policy with a different set of policy instruments. fortunately, the banking union attributed the ecb / ssm with a range of policy instruments of this nature. importantly, the ssm introduces a co - ordination mechanism between national macroprudential authorities and the ecb in preparing macro - prudential policy decisions. this mechanism – by taking into account the wider geographical area on which many european banks operate – allows macro - prudential policies in the ssm to be well co - ordinated, better targeted to risks having cross - border implications and, hence, more effective than national ones. however, i see a need to broaden the scope of the existing macro - prudential policy toolkit in general and also to broaden the toolkit available to the ecb in particular. one reason is that macro - prudential policy should become a fully effective policy to smoothen the financial cycle. this is not the case at present since macro - prudential tools to address the credit cycle applicable to the non - banking sector are largely missing. recent regulatory and policy measures were

fernando restoy : capital requirements and banking union speech by mr fernando restoy, deputy governor of the bank of spain, to the analistas financieros internacionales ( afi ) conference on banking regulation, madrid, 27 january 2014. * * * good morning. thank you, emilio, for your kind introduction and for the invitation to take part in this afi ( analistas financieros internacionales ) conference on banking regulation. as we move into 2014, we face a year of major challenges for the banking industry. this is so, above all, because of the historic importance of the start - up of the single supervisory mechanism, which will effectively come on stream next november. at that point the ecb will assume supervisory powers over the main euro area banks. and this institutional change, marking the origin of the banking union, will come about against a background of deepseated changes in the regulatory framework of banking activity. allow me to begin by reviewing some of the latest regulatory changes in the prudential field, before sharing some thoughts with you on the ongoing construction of the banking union in europe. solvency regulations one of the pillars of the financial reform, which arose in response to the shortcomings evidenced during the crisis, has been the measures aimed at strengthening bank solvency. as you know, the new solvency rules, known as basel iii, have been applied since the start of this year in the european union. they have been incorporated into legislation through a directive and a regulation on capital requirements. the rules require banks to appreciably increase the quality and quantity of regulatory capital. further, they increase the instruments at supervisors ’ disposal to restrict the risks of bank operations and to ensure financial institutions have sufficient loss - absorbing capacity, and, more generally, to safeguard the stability of the financial system as a whole. yet the mission to strengthen the regulatory framework in order to minimise the likelihood of banking crises, together with their associated costs, is far from complete. you will be aware that the basel committee on banking supervision is working on the definition and appropriate parameterisation of new liquidity requirements to complement the solvency requirements. at the same time, one task to be undertaken in the near future is the enhancement of the current tools for measuring and provisioning risk on bank balance sheets. specifically, the basel committee has advocated the advisability of working on improving the methods for calculating risk - weighted assets and thus increasing their consistency and homogeneity. indeed