A lack of dynamism is even more evident in the euro area, where growth forecasts have been revised downwards and point to a very weak pace of recovery. Among the emerging economies, growth continues to be high in Asia, in contrast to the poorer performance of some Latin American economies. At the global level, inflation continues to hold broadly at moderate levels and no significant inflationary pressures are discernible. This behaviour of prices justifies keeping monetary policy loose in the advanced economies, in line with the stance adopted at the start of the crisis. Nonetheless, in the United States and the United Kingdom, where recovery is moving more briskly, we are already witnessing the first steps of the withdrawal of the exceptionally expansionary, non-conventional measures introduced at critical junctures of the crisis. But we cannot yet refer to a change in tack in the monetary policy stance of these two countries. Rather, what is involved is an incipient return to a somewhat more neutral monetary stance. And as these countries’ central banks have insisted, the change will be gradual and in step with the progress of each economy so as to avoid jeopardising the recovery. The conduct of the Federal Reserve and the Bank of England is in significant contrast to that of the European Central Bank, which currently faces a very different growth and inflation scenario. The fragile recovery that began around mid-2013 in the euro area has progressively lost momentum in 2014.
The position of banks is evaluated in two scenarios: a baseline scenario, taking as its starting point the European Commission’s forecasts, and an adverse scenario, approved by the European Systemic Risk Board, the European Union’s macroprudential surveillance body headquartered at the ECB. The stress test horizon of three years (2014–2016) is formulated using banks’ consolidated balance sheets at the close of 2013. Minimum thresholds have been set that banks must meet in respect of core capital, according to the Basel III Accord. These stand at 8% for the asset quality review exercise and for the stress test baseline scenario, and at 5.5% for the adverse scenario. Those banks below these thresholds will have two weeks to submit capital-raising plans, which should envisage coverage of the shortfalls identified. They will have six months to cover capital shortfalls identified in the asset quality review and in the baseline scenario of the stress tests, and nine months to cover shortfalls estimated under the adverse scenario. 3)  Allow me to refer, finally, to the Single Resolution Mechanism. Political agreements were reached last May between the European Parliament and Council to set up this Mechanism, comprising a network of national resolution authorities, the new Single Resolution Board and the Single Resolution Fund. The Regulation creating the Single Board and Fund was published on 30 July; since then work has continued on the elements that will enable the Mechanism to come on stream on 1 January 2015.