The positive impact of this measure supplements and has been reinforced by other decisions taken by the various economic authorities, which, as I have said, have released a large part of the macroprudential buffers and have mitigated the impact of the pandemic on banks’ income statements. To date, the potentially negative side effects of these measures have been limited. Although the cost of capital for banks rose substantially with the onset of the pandemic, following the implementation of the broad raft of measures introduced to mitigate its impact this increase has been fully corrected. In addition, the recommendation to limit dividend payouts does not appear to have had a significant effect, at least in most European banking systems. 1  Another question that hampers the use of capital buffers by banks is that, under the current regulations, if capital levels fall below certain thresholds, preventive measures are activated, such as bans on dividends and the suspension of interest payments on AT1 and T2 instruments. Once again, banks would suffer the consequent stigma on the markets where these instruments are issued. 4  At the end of December, the ECB and the European Systemic Risk Board reviewed the recommendation. Given the continuing uncertainty about the economic impact of the pandemic, we have recommended that banks act with extreme prudence and that they refrain from paying cash dividends and conducting share buy-backs, or that they limit such distributions until 30 September 2021.
7  Investments of this kind would enable banks to face up to any major potential competitors –not necessarily financial institutions– that might venture into the credit market with greater guarantees of success. Allow me to end this address with a final reflection on the need to persevere with a European response to this crisis in the financial sphere as well. The response from the prudential authorities, along with the monetary and fiscal policy measures adopted, has so far enabled the initial impact of the shock to be absorbed and prevented the materialisation of a systemic risk in the financial system that would have further exacerbated the crisis and made it more persistent. However, some of the shortcomings that continue to exist have also been revealed. In this respect, the completion of the Banking Union with the approval of a fully mutualised European deposit insurance scheme would make a decisive contribution to ensuring financial stability in the euro area, both over the coming months and in the medium term. Further deepening of the Capital Markets Union project is also essential. Moreover, priority must be given to analysing how appropriate the European resolution and winding-up regulations are for a hypothetical systemic crisis, and the possible role of asset management companies in the event of severe impairment of European financial institutions’ balance sheets. To sum up, if we are to continue to address this crisis effectively, persevering with a European response - in the financial sphere as well - is essential. Thank you very much. 8