- based, and stem from pure regulatory barriers, a lack of infrastructure or limited political resolve. the results are pervasive. investment portfolios are not well diversified and investment opportunities are lost as these may not always be matched with savers ’ funds. the financial system remains fragile and fragmented because of the doom - loop between sovereigns and banks. an important consequence of insufficient integration is the limited capacity of risk - sharing mechanisms in the euro area countries, compared with those of the united states. 5 / 11 as you know, risk - sharing is the ability of countries to diversify country - specific shocks among other member states through the cross - country savings and capital market channels ( i. e. the private risk - sharing mechanisms ), as well as through fiscal transfers ( the public sector channel ). with regard to the private channels, the degree of risk - sharing through capital markets is comparatively low in europe. and although it moved on a rising trend during the precrisis years as a result of the increase in wholesale financial integration, it subsequently fell, remaining at levels well below those observed in the united states. limited development of equity markets in europe, prevailing national investment bias in the euro area relative to that in the united states, and a greater concentration of cross - border investment in a small number of member states in europe are some of the reasons explaining such divergent reactions between these two financial areas. the budgetary channel is practically non - existent in the euro area. by contrast, in the united states, estimates show that the public channel helps soften between 10 % and 20 % of adverse shocks in a particular state. as a result, the credit channel is ultimately the sole means for cushioning shocks across euro area countries. however, the credit channel is not enough to compensate for the weakness of the other channels. this means that, on average, between 40 % and 60 % of an adverse shock impacting a euro area country translates directly into a decline in that country ’ s consumption. these figures are double the impact calculated for the united states. besides the need to strength risk - sharing mechanisms to address macroeconomic shocks, achieving key targets such as controlling the levels of public debt and reducing the sovereign risk nexus ( often cited as the most fundamental original flaws of the euro design ) do not only depend on introducing policies of pure fiscal discipline. they also require soundly functioning and well - integrated financial markets capable of diversifying risks across borders and correctly pricing concentration risks. this is why

, one of the lessons from the crisis is that our ability to act as supervisors is limited once the banking crisis has broken, and the solutions are always costly and painful. new perspective : macroprudential supervision so far i have referred to the so - called microprudential perspective of supervision. this focusses on ensuring the robustness and solvency of banks individually without evaluating their potential interconnectedness with other banks and markets, and their exposure to common economic factors of risk. something particularly worrying is the fact that banks fully complied with solvency rules during the build - up of our real estate bubble. although the rules have changed so as to correct and avoid specific incentives, it cannot be ruled out that structural imbalances may accumulate again on bank balance sheets, just as they did during the pre - crisis phase. nor can it be ruled out that assets located in segments or geographical areas may be overvalued. if we look, for example, at real estate credit, we can see that we are far from the pre - crisis situation, since new real estate credit shows much healthier loan - to - value and affordability ratios. nor are house prices overvalued if we look at spain as a whole. however, and i believe here that madrid and barcelona are similar markets, in some places prices are reaching pre - crisis levels. consequently, and as a complement to the micro view, so - called macroprudential policy has emerged. its aim is to boost financial stability by preventing and mitigating systemic 8 / 13 risks and vulnerabilities, while also assessing potential imbalances or overvaluations that may affect a specific sector in our country. in this respect, it is not only individual risks that are considered ; these are assessed in an aggregate fashion. in sum, macroprudential policy complements microprudential supervision. both are necessary, though both differ in terms of focus, instruments and the way risk is evaluated. micro - supervision seeks to improve the safety and soundness of financial institutions, while macro - supervision focuses on the health of the financial system as a whole. since 2014 the banco de espana has indeed been identifying and monitoring vulnerabilities in the financial system, and it also has the possibility of introducing countercyclical capital buffers. along these same lines, we have recently been given the possibility of using tools other than the mere activation of capital buffers. these tools are more specific, enabling us