benchmark. bis central bankers ’ speeches however, it must be emphasised that monetary policy ’ s ability to address the challenges posed by a situation such as that we face today is not without limits. laying the foundations for a sound and long - lasting recovery in activity, investment and employment requires an approach in concert with other economic policies, especially fiscal policy, along with institutional reform, labour and product market reforms and strengthened european governance. thus, according to their individual circumstances, euro area countries should use the room for manoeuvre provided for in the stability and growth pact to bolster aggregate demand and growth in activity. admittedly, in many cases, the precarious state of public finances leaves little room for stimulus measures, such as tax cuts or higher public spending, especially because the countries with most spare capacity are also those with the highest levels of public debt. however, fiscal policy ’ s contribution to growth is not only determined by revenue and expenditure levels, but also by their composition. in that respect, there is some scope ( broader in some countries than in others ) for a shift in the tax structure towards taxes that are less distortionary and more favourable to growth. a further objective is to make public expenditure more efficient and direct it to those components that are more favourable to growth. in particular, public investment should be boosted, especially in infrastructure, an area in which various countries that have fiscal space have built up a considerable investment deficit in the past. those countries could improve their potential growth, given the positive correlation between this type of public expenditure and productivity ( at least when investment projects are efficiently selected, designed and implemented ) and, at the same time, support the recovery in the euro area as a whole in the short term. all in all, the coordination of fiscal policies should be reinforced, to encourage the countries that have fiscal space to use it, while those that have higher debt levels continue with their fiscal consolidation. in the medium term, as indicated in the five presidents ’ report of june 2015, a fiscal capacity for the euro area as a whole needs to be developed, to prevent overburdening monetary policy at times, such as now, of major economic difficulties. in the absence of more ambitious mechanisms, it would be advisable to reinforce the instruments already available, such as the european investment plan ( the so - called juncker plan ). redirecting unused structural funds towards that plan could help to launch projects that are unable to find funding in the present uncertain

and creditors of credit institutions in a position close to insolvency. spanish resolution regulations are already based on this bail - in model. that said, the scope of the bail - in under law 9 / 2012 is somewhat more limited than in the directive, which requires that resolution costs be borne not only by shareholders and the holders of hybrid and subordinated instruments ( as envisaged under law 9 / 2012 ), but also by the institution ’ s creditors ( with some exceptions, e. g. secured creditors or depositors for the amount guaranteed by the deposit guarantee fund ). that will necessitate the updating of spanish resolution rules to broaden the set of creditors who must bear the cost of resolution. bis central bankers ’ speeches closely connected with the idea of the bail - in is a new term called glac ( gone concern loss absorption capacity ), which consists of establishing a loss - absorption requirement once resolution has been reached. current debate on glac turns on what attributes financial instruments must have so they may be considered as possessing such loss absorption capacity. it is also being discussed what the appropriate amount for glac should be for banks to be able to continue performing their critical functions. final considerations : simplification for the sake of effective regulation to conclude, this entire programme of reforms will be of little use if the various agents involved cannot implement it effectively. implementation should involve two stages. firstly, authorities should ensure that international agreements are properly transposed to their respective national frameworks. secondly, for effective regulatory implementation to take place, there must be a pass - through from the theoretical and legal plane to everyday reality. here it is essential that practitioners such as risk experts, auditors, consultants and the supervisors themselves should strive to learn of and transpose all these regulations to their daily duties. i believe it is time to reflect on our subject today in something of a critical frame of mind. i have some concerns over the scope of the new regulatory arrangements. by way of example, the transposition of basel iii to the european union has required almost 700 articles, many of which not only involve notable technical complexity, but also entail the promulgation of extensive technical standards and additional supervisory guidelines for better implementation. just as banking industry practitioners face the challenge of implementing and applying this regulatory agenda, the challenge to regulators and supervisors is to reflect on how to square effective regulations with a framework that should ideally be simpler and more transparent, since the effectiveness of the new regulations will