In particular, and in keeping with previous communications, the Governing Council acted – with a package of expansionary measures – in response to inflation rates, both realised and projected for the coming years, which have remained persistently below the ECB’s aim, in line with its commitment to symmetry in relation to this aim. In this context, symmetry means that the ECB undertakes to act with the same determination whether inflation is persistently above or below 2%.1 In particular, the Governing Council of the ECB took the decision to decrease the interest rate on the deposit facility by 10 basis points to -0.50% and reinforced its forward guidance on interest rates by indicating that they will remain at their present or lower levels until it is seen that the inflation outlook robustly converges to a level sufficiently close to, but below, 2%. Such convergence should also be consistently reflected in the observed behaviour of underlying inflation. The ECB also agreed to restart net purchases under its asset purchase programme (APP) at a monthly pace of € billion as from 1 November and without a defined time limit. In order to preserve favourable bank lending conditions, the modalities of the new series of quarterly targeted longer-term refinancing operations (TLTRO III) were also changed, eliminating the 10 bp spread established on the interest rates applied to them and extending their maturity from two to three years.
Yet on the other hand, adopting technological innovation may also mean efficiency improvements for banks, although it is true that in the short term adapting to the new way of providing financial services and managing their assets will entail hefty costs for established banks. For society as a whole, the use of new technologies in finance may mean significant advantages in terms of cost savings and financial inclusion. As regulators, we have to promote the adoption of innovation while continuing to treat all participants symmetrically so that regulations governing the same activities are comparable, irrespective of the type of company providing the services. As I mentioned earlier, the decrease in non-productive assets has been one of the main factors which has contributed to the return to profitability of the Spanish banking system in recent years. Nevertheless, although it has decreased significantly, the share of these assets in banks’ balance sheets continues to be historically high and, consequently, banks should take advantage of this point in the cycle to make further progress in this area. Another important challenge for Spanish banks relates to the need for them to achieve reputational improvements. After the economic crisis, litigation increased notably, resulting in sizeable costs for banks which have a negative effect on their profitability. This increase in legal costs is not confined to the Spanish banking system but has also been observed in other jurisdictions.