previous crisis. 2. how european regulators responded to the crisis this time the response by the regulatory authorities to the crisis was immediate and ( so far ) effective. there are two reasons behind this prompt reaction : first, the previous crisis was very recent and the lessons learnt had not yet been forgotten, and second, the pandemic is a symmetric shock and hit hard all member states. this facilitated the decision making process by regulators, amid a period when monetary and fiscal authorities also provided enormous support. in fact, all players in the eurozone were fully aligned ; central bankers, regulators, political authorities. in a nutshell, rapid common action is now the name of the game, unlike in previous crises. the relief measures taken by the regulatory authorities are more or less known. i would like though to comment on two of them which i think are relevant for future policy actions but also for 1 / 5 bis central bankers'speeches a potential review of the existing framework : the first has to do with the usability of buffers. despite the accommodative monetary policy that provided ample liquidity to credit institutions and the clear communication from the supervisory authorities on the timeline for the flexibility granted, we notice that most banks across the globe are reluctant to dive into their buffers. recall that the essence of macro prudential buffers is to support the real economy during an economic downturn, thus mitigating procyclicality. i can think of several reasons behind this but i believe that the primary reason is the uncertainty about the true impact of the pandemic to the balance sheet of corporates and households. policy makers should review this issue and the effectiveness of macroprudential buffers after the end of the ongoing crisis. the second has to do with the recognition of credit losses. here the authorities also acted quickly and clarified the interplay between loan moratoria and loan categorization. however, there is a widespread view that many banks in the euro - area underestimate their credit losses due to the pandemic, especially for the performing customers that are currently benefiting from payment deferrals. the recent letter by the chair of the ssm regarding the identification and measurement of credit risk in the context of the covid - 19 pandemic communicates clearly the supervisory expectations. therefore, it seems ( correctly in my view ) that the asset quality of european lenders will be in the epicenter of the supervisory action this year. 3. country

, neighbors and neighborhoods suffer potential spillover effects from foreclosure sales because foreclosures may reduce the attractiveness of the neighborhood or may signal to the proposed basel iii capital rules would simultaneously introduce a specific minimum common equity ratio and define “ common equity ” so as to limit or exclude consideration of items that may not provide the loss absorbing capacity that common equity is supposed to represent. written testimony of phyllis caldwell, chief of homeownership preservation office, u. s. department of the treasury, before the house financial services subcommittee on housing and community opportunity hearing on “ robo - signing, chain of title, loss mitigation and other issues in mortgage servicing, ” november 18, 2010. potential buyers a forthcoming decline in neighborhood quality. in the end, an overhang of homes awaiting foreclosure is unhealthy for the housing market and can delay a recovery in housing markets and the broader economy. several possible explanations have been suggested for the prominence of foreclosures : the lack of servicer capacity to execute modifications, purported financial incentives for servicers to foreclose rather than modify, what until recently appeared to be easier execution of foreclosures relative to modifications, limits on the authority of securitization trustees, and conflicts between primary and secondary lien holders. whatever the merits and relative weights of these various explanations, the social costs of this situation are huge. it just cannot be the case that foreclosure is preferable to modification for a significant proportion of mortgages where the deadweight costs of foreclosure, including a distressed sale discount, are so high. while some banks and other industry participants have stepped forward to increase the rate of modifications relative to foreclosures, many have not done enough. we need renewed attention in many quarters of government and the financial industry, and among investors in mortgage - backed securities, to the lagging incidence of modifications. conclusion in conclusion, i regret to say that the hangover from the housing bubble of this past decade is still very much with us, as revealed both in the inadequate capacity of mortgage servicers and the continued impact of foreclosed homes on the housing market. while bank regulatory agencies can and should respond to specific failings that are being identified in our interagency examination, there is a strong case to be made that broader solutions are needed both to address structural problems in the mortgage servicing industry and to accelerate the pace of mortgage modifications or other loss mitigation