In the euro area, the Spanish experience with dynamic provisioning shows that increasing buffers during the credit boom can increase the resilience of banks; this was visible in the first phase of the financial crisis.
Over the course of 2010, the economy is expected to gradually recover. At the same time, available indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the Governing Council’s aim of keeping inflation at rates of below, but close to, 2% over the medium term.