debt needs to be sufficient to ensure that public funds are not at risk in the event that a resolution of a firm is necessary, making this long - term debt a component of management compensation might also be used to help reduce the likelihood of a default. long - term debt provided by outside creditors exposed to risk of default can create useful market discipline. however, outside creditors do not have the same information or decision rights as inside management. structuring a long - term debt requirement so that a meaningful component consists of deferred compensation held by senior management would presumably strengthen the incentives for proactive risk management. in my opinion, more research is needed into how the structure of management compensation for financial firms could incentivize good risk management and limit the appetite for excessive risk. 1 even if every jurisdiction were to successfully implement these types of initiatives and consequently reduce the default risks associated with their g - sifis, the risk of failure would not be fully eliminated. this means there would always be some residual risk of major disruptions to financial markets due to a disorderly default of a large financial firm. consequently, the development and implementation of credible resolution mechanisms for g - sifis is the second key component of a global strategy to improve financial stability. by credible, i mean that if the situation of an impending g - sifi default arises, the home authorities will proceed with the resolution plan, rather than give in to pressure to intervene to prevent the failure. this requires that the resolution mechanisms be capable of significantly mitigating the negative externalities associated with winding down a failing g - sifi. although the specifics of the resolution mechanisms will necessarily vary to some extent across jurisdictions, reflecting differences in institutional structures, legal frameworks, and regulatory regimes, the goal is common – to be able to resolve any g - sifi regardless of its home structuring this in a way to get the incentives right is critical. for example, one would want to be certain that in no circumstance would management see a benefit from putting the firm into resolution in order to convert its debt holdings into equity. bis central bankers ’ speeches jurisdiction, even in periods of stressful financial market conditions, without taxpayer funds, in a way that minimizes knock - on effect to financial markets and other financial institutions. as i have indicated in earlier speeches, i endorse the federal deposit insurance corporation ’ s ( fdic ) single point of entry ( spe ) resolution framework for the united states. for the sp

luis de guindos : presentation of the european central bank annual report 2023 to the committee on economic and monetary affairs of the european parliament introductory remarks by mr luis de guindos, vice - president of the european central bank, to the committee on economic and monetary affairs of the european parliament, brussels, 18 april 2024. * * * introduction i am pleased to appear before this committee to present the ecb's annual report for 20231, a year in which the ecb consolidated progress in its fight against inflation. as well as assessing economic developments in the euro area in 2023, our annual report gives an account of the eurosystem's monetary policy and other activities conducted by the european system of central banks ( escb ). in response to european parliament resolutions, it also includes a box explaining how the ecb's secondary objective is considered in the conduct of the ecb's monetary policy and reporting activities. today we are also publishing our written feedback statement, which provides responses to the european parliament's resolution on our previous annual report. 2 in my remarks today, i will start by focusing on the economic outlook for the euro area and the monetary policy decisions taken at our recent monetary policy meeting. i will then briefly update you on our current financial stability assessment before going on to discuss the importance of a resilient financial system. the euro area economy and our monetary policy as detailed in the annual report, euro area growth slowed to 0. 4 % in 2023 after expanding by 3. 4 % in 2022. this slowdown was to some extent attributable to the economic repercussions of russia's war against ukraine. the impact of higher interest rates alongside spillover effects from the weak industrial sector to services also weighed on growth. euro area headline inflation declined by 6. 3 percentage points over the course of 2023 to reach 2. 9 % at the end of the year. the decline was broad based across all the main components of inflation, reflecting the fading impact of previous large supply shocks, lower energy commodity prices and tight monetary policy. this year, economic indicators suggest that activity has got off to a weak start and will recover only gradually. consumer spending is set to remain sluggish in the near term but should strengthen as real disposable income continues to recover. private investment is expected to show continued weakness in the period ahead before the impact of weak final demand and tight financing conditions starts to fade. 1 /