Later in 2013 economic activity should gradually recover, as global demand strengthens and our accommodative monetary policy stance and significantly improved financial market confidence work their way through to the economy. In order to sustain confidence, it is essential for governments to reduce further both fiscal and structural imbalances and to proceed with financial sector restructuring. Today, we have also decided to continue conducting our main refinancing operations (MROs) as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the sixth maintenance period of 2013 on 9 July 2013. This procedure will also remain in use for the Eurosystem’s special-term refinancing operations with a maturity of one maintenance period, which will continue to be conducted for as long as needed, and at least until the end of the second quarter of 2013. The fixed rate in these special-term refinancing operations will be the same as the MRO rate prevailing at the time. The rates in the three-month longer-term refinancing operations, to be allotted until June 2013, will be fixed at the average rate of the MROs over the life of the respective longer-term refinancing operation. Let me now explain our assessment in greater detail, starting with the economic analysis. Following a contraction of 0.2%, quarter on quarter, in the second quarter of 2012, euro area real GDP declined by 0.1% in the third quarter.
This applies both to the European and the domestic spheres. The surveillance framework operating at the European level was mostly focused on the fulfilment of the fiscal targets embodied in the Stability and Growth Pact. However, this framework revealed itself insufficient and ultimately ineffective, both because it relied on nominal deficit thresholds – which masked fiscal vulnerabilities under the umbrella of a large cyclical increase in revenues- and because it was loosely applied. In several Euro area countries, Spain among them, the structural policies that could have set the basis for a more lasting and sustainable growth path were timid in a period when the economy was supported by a favourable environment. This is not, by the way, a European peculiarity: as we all know, structural policies tend to be implemented out of necessity, that is, not in the good, but in the difficult times. However, the narrative of the financial crisis in Spain somewhat differs from other developed countries. Our financial system was not exposed to the complex structured assets which were at the root of the financial crisis in 2007-2008. But, while we did not hold this kind of toxic assets, we have suffered the toxification of the housing sector assets as the crisis deepened. The freezing of the global financing markets that started in mid-2007 also disrupted our financing patterns (heavily dependent, as I have said, on external funds directed towards the housing sector).