Mr. Vasileios Madouros:

I very much agree with the importance of building resilience when times are good so that resilience can be drawn down when shocks hit, whether this is for the economy as a whole, including public finances, or in the context of the financial sector. This is precisely our approach in the context of the financial sector.

As I said in my opening statement the banking system is resilient to a range of potential adverse shocks. We can see this in various ways. There are substantial capital buffers to absorb losses in future stress periods. There are substantial liquidity buffers, which are significantly above the minimum requirement, that can be used in the face of short-term liquidity shocks. There is a much more stable funding structure relative to the past. In the past there was a lot more reliance on much more volatile international sources of wholesale funding. At present the reliance is much more on domestic sources of deposits. Deposits are now greater than loans, which is the reverse of what it was in the past. More broadly there is a much more simple business model and much more prudent lending standards.

Overall there is a substantial degree of resilience across a range of dimensions to absorb potential adverse shocks and not to amplify them. A very similar dimension of resilience applies to the public finances. This is part of the reason we welcome the actions on the national reserve fund. This is one of the dimensions of helping to build resilience against future adverse shocks. As I said in my opening statement, it is important that fiscal policy can operate in a countercyclical way. This is exactly what we want so that when adverse shocks hit, fiscal policy can play its part in supporting the economy and has the capacity to do so.