pablo hernandez de cos : evidence - based policies - from theory to practice address by mr pablo hernandez de cos, governor of the bank of spain and chair of the basel committee on banking supervision, at the presentation of the collaboration agreement between the center for monetary and financial studies ( cemfi ) and the ministry of inclusion, social security and migration, madrid, 18 january 2022. * * * minister of inclusion, social security and migration, general secretary of inclusion and social welfare objectives and policies, director of cemfi, ladies and gentlemen, good morning. allow me to begin this short address by saying how pleased i am with the signing of this collaboration agreement between cemfi and the ministry of inclusion, social security and migration. in recent months i have had the opportunity to publicly emphasise the importance of the evaluation of public policies and of incorporating the results of these evaluations into decisionmaking by public authorities, 1 in the belief that, in a democratic society, evaluations should play a political as well as a technical role. in the political sphere, evaluating the design and effects of public policies should foster transparency regarding policy - makers ’ actions and their outcomes. this facilitates accountability and democratic oversight by parliament and citizens. it also fulfils a technical function, strengthening the decision - making process by providing it with valuable information to enhance its effectiveness and efficiency. therefore, promoting “ evidence - based policies ”, as with the signing of this agreement, amounts to both a technical argument in favour of effectiveness and a political statement in favour of democratic oversight of political power by citizens and their representatives. in order for these evaluations to be carried our properly, they need to be conducted by independent researchers and institutions, who must have the appropriate high - quality and sufficiently detailed data. under this agreement, an independent and rigorous evaluation will be launched of a specific public policy : the pilot projects for developing inclusion itineraries for beneficiaries of the minimum income scheme. to this end, the rigour, independence and technical excellence of cemfi ’ s researchers are paired with quality data provided by the government and its stated desire to design its policies on the basis of empirical evidence. this alone should be reason for satisfaction. i hope that the results of this evaluation will help improve the future design of this public policy and that this exercise will contribute to establishing a culture of evidence - based policies that will benefit all citizens. i believe that this kind of initiative can be particularly useful for spanish society at a

or even a single region subject to a subdued macroeconomic performance in the recent past. third, regulation. banks are now facing new requests to raise more and better - quality capital. more importantly, significant institutions will have to hold on their balance sheets substantial volumes of liabilities that could be subject to bail - in. clearly, those retail banks with little or no tradition in issuing capital and other securities in capital markets will have particular difficulties coping with the enhanced regulatory framework. admittedly, though, the corporate structure of many retail banks - particularly those which are not yet regular corporations listed in capital markets - may face less immediate pressure to restore higher profitability levels. that may allow them to buy some time. 3 / 5 yet, low sustained profitability is often a symptom of vulnerability and, certainly, of inefficient allocation of the resources employed in the banking business. there is therefore a need to reflect on the best way to strengthen retail banks, to make them better able to cope with the new macroeconomic and regulatory conditions without damaging the social benefits associated with their activity. it would be unsound to try to establish specific strategies with the pretention to be unconditionally applied in all circumstances. however, i see some difficulties for numerous retail banks in adapting to the low - profitability and tighter regulatory environment if they are not able to increase their ability to compete with banking corporations in terms of costefficiency, business diversification and access to capital markets. some transformation of the retail and, in particular, the saving banking sector therefore seems unavoidable in order to meet the target. we, in spain, have already taken some steps in that direction. as you well know, in response to the financial crisis, measures were taken along different lines, which helped solve the main shortcomings affecting the spanish banking sector at that moment in time and positioned it in a good starting point for the implementation of the ssm. in addition to measures taken to reduce the level of exposure to real estate development and to drive greater consolidation in the sector, a major effort was made in the field of recapitalisation, which went beyond the actions taken by public authorities. since 2008, the sector has set aside new provisions for outstanding loans or foreclosures for approximately €300 billion. and, after absorbing this substantial balance sheet clean - up into results or reserves, banks have managed to increase their own funds by approximately €70 billion over the same period.