Lastly, specific remunerative arrangements have also played a significant role in encouraging short-termist behaviour. One rather controversial novelty, especially in investment banks, has been to introduce ceilings on and restrictions to credit institutions’ remunerative policies, the aim being to correct or, at least, mitigate certain perverse incentives. Supervisory changes Yet despite all these regulatory changes, we must be aware that no rules can stand in for proper supervision. The role of supervision remains essentially the same: it is preventive. It is usually said that July and August forest fires are controlled and extinguished in the preceding months of March and April. At this earlier time, scrub is cleared and firewalls are set in place, enabling the future advance of the flames to be controlled. If the homework is not done in the spring, we pay the consequences in the summer. Likewise, the fundamental role of the supervisor is to prevent. This means ensuring that, during upturns in the economy, the lending granted by banks has been correctly analysed and its price set so that the risks assumed are covered. That prevents excessive growth in lending that may lead to bubbles emerging. Sadly, one of the lessons from the crisis is that our ability to act as supervisors is limited once the banking crisis has broken, and the solutions are always costly and painful. New perspective: macroprudential supervision So far I have referred to the so-called microprudential perspective of supervision.
Thank you. 13/13