The aim is, should the case arise, to provide for the management of situations of bank nonviability while preserving the stability of the financial system, minimising public financial support, safeguarding depositors and ensuring the continuity of the critical economic functions of the banks in question. All of the foregoing might influence the management of bank balance sheets and have a particular bearing on the composition of their liabilities, part of which must be eligible for absorbing losses and for their recapitalisation. The SRM comprises two elements: the Single Resolution Board and the Single Resolution Fund. The latter, by means of contributions from the banking sector, is expected to amount to € billion in 2024. In the national arena, the recently approved legislation on the recovery and resolution of credit institutions and investment services firms distinguishes between pre-emptive resolution functions, which correspond to the Banco de España in the case of credit institutions and to the National Securities Market Commission (CNMV) in that of investment services firms, and enforcement resolution functions, attributable to the Fund for the Orderly Restructuring of the Banking Sector (FROB), which sits moreover on the SRM Board, with the Banco de España having observer status. Performance of credit institutions in 2014 Before concluding, I shall review the recent performance of Spanish credit institutions. The year 2014 saw an improvement in financial conditions and a recovery in activity and employment.
Turning to prices, inflation, which has been in negative territory virtually since the recovery began, has undergone a progressive correction since the start of this year, standing at –0.2% in May further to a rise in the energy component and a gradual pick-up in core inflation. The decline in prices in Spain is proving more marked than in the Monetary Union as a whole, meaning that the inflation differential will continue to help in bringing about an ongoing improvement in our economy’s competitiveness. Inflation might be running at a moderately positive rate at the end of 2015 owing to a combination of several factors. Firstly, the progressive petering out of the effect induced by the heavy fall in oil prices in the closing stretch of 2014 is expected to bring about an automatic rise in the energy component of the CPI in the closing months of this year. BIS central bankers’ speeches  1  And further, the depreciation of the euro will impact non-energy goods and services prices. In any event, the persistence of considerable slack in the economy, i.e. of substantial unused capacity, means a mild recovery in the inflation rate over the next two years is to be expected. The factors underpinning growth The favourable growth outlook is underpinned, above all, by the restoring of macroeconomic equilibria. The progress made and the measures underpinning it have allowed the confidence of both external investors and of Spanish households and firms to be restored.