Operating income continues to be the primary contributor to the profitability of banks, which fell from the end of 2014, to 16 percent of equity in March. This was due to the reversal of the temporary impact of inflation on the indexation margin and a reduction in interest rate spreads. Bond issues by the banks contribute to the diversification of funding sources, but medium-sized banks remain highly dependent on wholesale funding. Stress tests yield that the levels of capitalization permit to absorb the materialization of a scenario of severe conditions (figure 14). In short, the internal and external scenarios are virtually unchanged from the last Report, although the persistence of very favorable global financing conditions can incubate vulnerabilities that would emerge if and when such conditions disappear. This would have a  BIS central bankers’ speeches  5  significant impact on global financial markets, particularly in emerging economies, whose growth prospects have been on a downward trend. In this context, the increasing indebtedness of domestic credit users (firms and households) translates into lower resilience to possible financial stress events, or to a deterioration of the macroeconomic environment. Chile maintains adequate solvency and external liquidity to confront international financial stress scenarios. However, this does not insulate the country from such developments and their effects. I would like to finish with some final thoughts. Final thoughts The macroeconomic outlook has not changed much with respect to projections in March.
Financial cohesion, in turn, ensures that the monetary policy signals are properly and evenly transmitted to all jurisdictions of the monetary union, without, however, levelling out the premiums for different credit and liquidity risks. In fact, during the crisis, the divergence of bank funding conditions at national level has led to cross-country differences in both the costs of financing and the availability of loans. The retrenchment of credit supply within national borders, coupled with funding pressures, has impaired the transmission of monetary policy. The need to counter these adverse developments has been a key rationale behind the extraordinary monetary policy actions undertaken by the ECB in the wake of the crisis, such as the full allotment, the longer-term refinancing operations (LTROs) or the relaxation of the collateral framework. At the same time, the emergency liquidity assistance (ELA) provided by the national central banks was used more intensively. Although this is carried out by the national central banks at their own risk and for their own account, it might lead to tensions between the national and European levels of monetary policy, which would not be sustainable. A renationalisation of the monetary architecture would not be effective. Our non-standard measures can and should only provide temporary support for two reasons. First, keeping our non-standard measures in place for too long can adversely affect agents’ incentives in the economy at large and lead to moral hazard.