As a consequence, credit institutions see their loan loss provisions to vary more closely in line with the credit risk existing in their balance sheets, and the profit and loss account fluctuates less over the cycle. The main point here is that this strengthens the solvency of each individual credit institution and the stability of the entire financial system. Before continuing with the background to the dynamic provision, I should like to address a criticism made by accountants. It was said that this provision amounted to a distortion, and sometimes even a manipulation of the income statement. This is far from true. The Spanish regulator required institutions to advise the market of the amount of this provision so that analysts and investors could, if they so wished, “discount” its impact. The mechanism is completely transparent and institutions cannot use it to manipulate their results. Admittedly, bankers did not welcome the statistical provision as warmly as we supervisors did. In fact they openly opposed it at first, arguing, with some reason, that this provision, by tightening the requirements for Spanish institutions alone, gave rise to an uneven playing field, especially for those institutions most heavily exposed to international competition. With time they came to appreciate that this provision helped strengthen their solvency and, therefore, their medium-term attractiveness and resilience, despite the fact that around 10% of their net income had to be assigned to the statistical provision.
I am going to have a blog. It’s usual in the United States; in other places, not so usual. I will comment on general questions about the future, about Europe, about macroeconomics. What will your first post be about? I am still hesitating. It could be about the future of monetary policy and the points I left out in my recent speech, from neutral interest rates to yield curve control. Are there any rules that bind you in terms of what you can write about? Beyond the ECB rules what will bind me is European decorum. 1 The role of central banks in prudential supervision 2 See Funke, M. Schularik, M. and Trebesch, C. (2016) “Going to extremes: politics after financial crises, 1870-  2014” in European Economic Review, 88, 227-260. 8/8  BIS central bankers' speeches