In particular, the non-performing loan ratio for lending to the resident private sector, in business in Spain, stood at 5.3% in June 2019, down 8.7 pp from the high levels recorded in December 2013. Foreclosed assets, meanwhile, have fallen continuously during the years of recovery; a total cumulative reduction of 50% from the peak levels recorded in 2011 had brought them down to below € billion by June 2019. As I was saying, this progress should not cause us to forget that the Spanish economy has significant imbalances, among which the still high levels of unemployment, government debt and external debt stand out. Since the start of the recovery progress (of varying intensity) has been seen on these fronts, but the magnitude of the imbalances built up in terms of the stocks of these variables means that they still amount to vulnerabilities (to turbulence in international markets, for example). At the same time, the Spanish economy’s growth capacity continues to be constrained by its very poor productivity dynamics, which is particularly worrying insofar as it will also be adversely affected by the impact of population ageing. Main challenges facing the Spanish economy  Turning to focus on the labour market, as you all know, the Spanish economy’s rate of unemployment remains very high, at around 14%. Also, around 45% of the unemployed have been seeking work for a year or more, a factor that reduces their likelihood of success.
Such assessments are usually allocated according to each member’s contribution to the CCP’s default fund. This way of allocating assessments, provided it is transparent, gives members a degree of predictability about what will happen. Nevertheless, they could expose surviving clearing members to sudden and very large liquidity demands which they would have to source in the market, and could thus have strong contagion effects14 – even pushing members to close out their contracts and leave the CCP, rather than face the spiralling costs of remaining a member. For these reasons, such tools may prove problematic for bank supervisors. Another tool which is frequently mentioned in discussions on CCP recovery is variation margin gains haircutting (VMGH). In my view, this tool may have a certain advantage over ex post cash calls, in the sense that it would alleviate the need for members to raise extra  12  While central clearing protects banks against idiosyncratic risk, it can reduce their incentives to protect themselves from non-diversifiable shocks, hence the need for regulation to provide a strong incentive framework. For a theoretical discussion, see Biais, B., Heider, F., and Hoerova, M., “Clearing, counterparty risk and aggregate risk”, European Central Bank, October 2011. 13  For a discussion of loss-allocation rules, see also Elliott, D., “Central counterparty loss-allocation rules”, Bank of England, Financial Stability Paper, No. 20, April 2013. 14  See Heath, A., et al. (2015, op. cit.) for a simulation of the impact of different loss allocation mechanisms.