-  Second, advantage should also be taken of the current cyclical conditions to intensify the structural reform agenda and prevent its reversal. In the case of the labour market, the level of temporary employment and repeated contract renewals should be reduced, without undermining job creation, active policies should be focused on the most effective measures to enhance employability and set in place mechanisms that facilitate greater alignment between wage conditions at individual firms and their productivity levels. These factor market reforms must be accompanied by product market reforms that encourage business competence and competition. Productivity gains in the economy also demand improvements in human and technological capital. -  Third, in the financial sphere, the Spanish financial system continues to face various significant challenges. Notably: (i) the need for banks to continue to actively manage their impaired assets, so that the financial system, through its lending activity, may continue to support economic growth; (ii) the need to recover profitability levels, without unduly easing credit standards; (iii) the need for credit institutions to strengthen their capitalisation levels, to adapt to a more demanding regulatory framework; and (iv) the need to address the competitive challenge stemming from the emergence of new technologies, competitors and services in the financial sphere.
13/14  The materialisation of some of the risks to the economy that were discerned six months ago only adds to the importance of the challenges for the medium and long term highlighted in the Report and, as I have tried to stress today, to the need to address these challenges speedily and with sufficient resolve. 14/14