The latter is a very important part of the total salary, and implies that differences between the salaries of poor and outstanding performers are large. The level of salaries is benchmarked to private sector competitors in the local market where we operate. The criteria used are designed to be transparent with little room for subjective judgement. Measured excess return contribution is a very important component. 10. I believe that our experience so far has been positive. Since the Fund’s first full year in 1997, the annual return in international currencies has been more than 6 per cent in nominal terms and 4.1 per cent in real terms. Since NBIM was set up in 1998, we have recorded the performance in 34 quarters. In 9 quarters the return to the Fund has been lower than the benchmark, but in 25 out of the 34 there has been a positive excess return. On average, NBIM has earned exactly half a percentage point higher return per year than the benchmark portfolio. In nominal terms, that adds up to somewhere between USD 4 and 5 billion in extra earnings since 1998. 11. In this introduction I have touched on what I believe are important factors behind the performance of NBIM. It is important to keep in mind that the purpose of investment management operations is to make money, so we need to have a business organisation. The responsibilities of each individual must be clearly defined, and his or her remuneration must depend on performance.
The firming and intensification of these trends will largely depend on developments in the Spanish economy and on recovery taking root. The outlook for the economy remains favourable; so far, it has proven resilient to an external environment in which growth forecasts for the global economy have been revised downwards, and in which the recovery in European countries – those most important for our economy – has lost momentum. Thus, on the domestic front at least, it would be necessary to embed the reforms under way, thereby enhancing our capacity for recovery. 2  BIS central bankers’ speeches  The start-up of the Single Supervisory Mechanism Among the challenges posed by the SSM is that of attaining quality bank supervision, applying strengthened and uniform standards and making the most use possible of the acquired knowledge of the various national authorities, while setting in place a common supervisory culture. In light of the work undertaken to date and the intense collaboration between the ECB and the national authorities, these goals are realistic. The Banco de España is striving to ensure this is a successful process, cooperating with the ECB and the other SSM participants. We have adapted our organisational arrangements and working methods to smooth interaction with the SSM and the ECB. A further key challenge will be to maintain a level playing field in the member countries, applying uniform supervisory principles. That is a major challenge, given that in Europe there is a wide diversity of banking models and legal systems.