Let me briefly mention a few of the lessons from our experience in Covid-19. First the capital framework does not in practice support use of bank capital buffers in a stress as we intended7. And that would have mattered a lot in the absence of the substantial government support for the corporate sector. Second, we need to change our approach to stress testing in a stress if we are to avoid those stress tests further amplifying any downturn8. And third, in a shock of roughly half the size of the global financial crisis, it was only large-scale use of central bank balance sheets that calmed dysfunction in the system of market-based finance.9 We are continuing to learn through the Russia-Ukraine crisis too. We are exploring concentrations in, and interconnections across, energy and other commodity markets, the financial system, and the real economy, as well as the potential for feedback loops between them. And we have observed too that commodity markets are relatively opaque. We must now develop the macro-prudential framework to reflect the lessons from these recent stresses. Looking beyond recent events, neither the financial system nor the economy stands still: there are clear structural changes that macro-prudential policy must confront. 1.The rise of market-based finance: vulnerabilities that are as much global as domestic One key challenge is that many vulnerabilities are as much global as they are domestic.10 That includes non-bank, or market-based, finance. Non-bank financial institutions currently represent around 50% of global (and UK) financial sector 4/7  BIS central bankers' speeches  assets.

Are there any other objectives than price stability and financial stability that may be suitable for a modern central bank? Many countries also have objectives for developments in the real economy written into the regulatory framework governing the central bank’s activities. For instance, in the US legislation it says that the Federal Reserve shall promote “maximum employment”, while the British legislation says that the Bank of England shall support “the economic policy of Her Majesty’s Government, including its objectives for growth and employment”. In Sweden there is no specific objective for real economic developments written into the law, but it is nevertheless considered to be understood that the  4  See, for instance, Oosterloo, S. and J. de Haan, (2003), ”A Survey of Institutional Frameworks for Financial Stability”, Occasional Studies Vol.I/No. 4, De Nederlandsche Bank, for an overview of how the task of promoting financial stability is dealt with in different central banks’ regulations and in practice. 4  BIS Review 21/2006  Riksbank – as an authority under the Riksdag, the Swedish parliament – shall support the objectives of economic policy with the aim of attaining sustainable growth and a high level of employment. Exactly how the objectives are worded thus varies considerably between countries, often depending on the fact that changes and modifications have gradually been made to regulations originally written much earlier. I dare to claim nevertheless that the essence of modern central banks’ wording of their objectives is the same.