, it could create a problem of fire sales that may additionally reduce the prices of the assets, generating losses for the rest of the institutions. in these circumstances, there should be a powerful, usable and credible backstop that could be activated even preemptively. the stability of the financial system and the potential for systemic risks to alter the functioning of that system have long been important topics for central banks, and i would like to encourage some additional consideration to this broader approach. some episodes, including the spanish experience during the great financial crisis, suggest that the propagation of shocks is especially relevant for mid - sized entities and that the swift and orderly resolution of the problems is the vaccine against contagion. so, allow me to finish my presentation where i started : the current crisis management framework has been crucial in advancing the banking union and it has proven most useful in resolving very relevant events. however, the experience allows us to draw lessons that should be incorporated into the framework to contribute more effectively to maintaining financial stability and to ensuring the functioning of the banking union. that requires putting in place effective regimes to deal with remaining gaps such as those i have set out : liquidity in resolution, treatment of smaller institutions, unlevelled playing fields in an incomplete banking union and appropriate policies for dealing with systemic crisis. of course, the adoption of such an ambitious reform may require difficult political compromises. but in the current covid - stricken economies and societies, european citizens deserve a more robust crisis management framework commensurate with the risks threatening us. a consistent and comprehensive bank failure management framework will require that we work together and that every effort be made to safeguard and reinforce financial stability within a framework of cooperation and coordination between authorities at the european and international level. thank you.

recent developments in bank credit and its determinants let me now turn to the recent developments in bank credit. the latest data show that the stock of credit to the private sector in spain continues to fall, but the rate of decline has tended to slow gradually since the second half of 2013, in parallel with the recovery in gdp. this slow pace of recovery of the credit cycle is consistent with historical regularities during previous similar episodes. in fact, there is a well - established branch in the economics literature that has coined this phenomenon “ creditless recoveries ”, and there are abundant studies showing that these episodes are not exceptional either in emerging or in advanced economies, especially in the aftermath of a recession accompanied by a banking crisis. the moderation in the contraction of the aggregate stock of credit points to an increase of new lending operations, which is consistent with the economic recovery. in fact, the information available on new credit transactions suggests that the segment of lending to smes has started to recover. and in the most recent period, this trend has gradually spread to the other credit categories, such as in the case of credit extended for house purchases. what are the determinants behind these recent developments? in my view, demand - side factors are playing a relevant role in the incipient recovery in credit flows. the improvement in growth and employment prospects and the reduction in aggregate uncertainty have all resulted in an increase in current and expected income, expanding the willingness of agents to spend and their ability to take on new debts while reducing the risk perceived by lenders. in parallel with the recovery in the demand for investment, we have witnessed an improvement in the financial position of borrowers. specifically, from the peak observed in mid - 2010, the gap between debt ratios in spain and the euro area average has fallen from 37 pp to 9 pp in the case of corporates and from 20 pp to 9 pp in the case of households. but credit flows are also being stimulated in the current juncture by several factors more directly connected with the supply side. first, the strengthening of the capital position of banks, following the conclusion of the cleaning - up, recapitalisation and restructuring of the bis central bankers ’ speeches financial system, is contributing to enhancing their capacity to finance the economy. the comprehensive assessment carried out last year at the european level also contributed notably to restoring investors ’ confidence in the spanish banking industry. the increasing reintegration of european financial markets since 2013, stemming from various actions taken both at the