Today's topic, financial stability. Boring. True. Thank goodness. Only a financial system that is stable can function properly. Businesses and households obtain loans, savers benefit from good investment opportunities and payments are undisrupted. Yeah, as I said, boring. But that's not all. Shocks in the form of unexpected developments can really shake the world. And then? Well, a stable financial system also works in times like that. Businesses continue to get loans and your salary flows safely into your account. Aha, so it's not a big deal. There you go. Financial stability. That would be nice, but we need to take a closer look. Aha, things are getting exciting after all. Indeed, banks are interconnected. They grant each other loans. This means liquidity flows to where it's needed. That stabilizes the system. But this calls for trust and for the banks to have enough capital. The more capital a bank holds, the greater its resilience and its loss-absorbing capacity. That's supposed to be exciting? Listen, because they're interconnected, a shock can quickly spread through the financial system. Aha. Losses from one bank can pass onto another bank and impact the entire financial system. Banks are now protecting their capital, for example by limiting risks. As a result, lending can falter. The financial system no longer works smoothly. Ultimately, everyone suffers, and the economy could enter into a recession. Okay. Financial stability can also be at risk if one of the affected banks is very, very large. Or if the economy does very well for a very long time. Yes, positive trends make us forget the bad times. We become over-optimistic. We overvalue our wealth and underestimate risks. This can lead to asset price booms and busts. Huh? Exactly. Because if too many people invested once and borrow money for their investments, and then a shock occurs, the prop will be very loud. That's because everyone's affected at the same time. Ouch. And this can put financial stability at risk. However, because we know all this, the Bundesbank proactively monitors and assesses potential threats to financial stability. It looks at whether loans are granted too easily, whether too much optimism is leading to risks being underestimated, whether individual banks are endangering the system, and assesses the general resilience of the financial system. It raises awareness of the risks, and works with other institutions to ensure that banks have sufficient capital buffers to see them through times of crisis. That's how the Bundesbank helps keep our financial system stable. Ech and boring. Exactly. Thank goodness. Thank you.