( sgp ) which governs fiscal policy and the pursuit of sound public finances by member states ). as we emerge from the pandemic, it seems timely to consider how the eu ’ s macroeconomic framework is working and, in particular, whether it needs a greater intergenerational focus. ( as it happens the european commission started an economic governance review before the pandemic to look at the way the sgp was working, and the ecb is in the process of reviewing its monetary policy strategy. ) i welcome the contribution that others have made to this debate in recent years. 3 looking at the sgp itself, sound public finances and sustainable debt are prerequisites for good policymaking. only with these can economic policy turn to the task of growing the stocks of economic capital in a sustainable way for the long - term. but if we take an intergenerational and more integrated view of our macroeconomic policy challenges – and continuing with climate change as an example – we should be looking at our existing measures of debt sustainability against the investment required to manage the transition to net zero emissions by 2050. in highlighting the challenges of the ‘ green transition ’, the eu ’ s recovery and resilience fund ( rrf ) recognises the pivotal role of fiscal policy in achieving this objective. it also points to an important differentiation between expenditure – which often has an automatic or stabilisation focus – and investment ( in the four capitals ), which has implications for growth, productivity and resilience, and thus for longer - term debt sustainability. 4 this means moving beyond a sole focus on the structural budget balance and recognises the importance of the composition of investment and expenditure as well as its size. ( i would argue that the assets on a sovereign ’ s balance sheet are also relevant when taking a longer term perspective : net worth is a good indicator of sustainability. ) conclusion an important focus of economic policy should be to build resilience to systemic risks and to the transitions that have already started. as we build that resilience, we also need to continue to learn from, and adapt to, events as they unfold. many of our most important macroeconomic policy frameworks were developed 30 years ago. as we contemplate the future – not least the challenges posed by the net zero target – the issue 2 / 3 bis central bankers'speeches we need to debate is whether those frameworks are what we need for the next 30 years. what changes

the crisis. the bank with the largest cumulative amount ( €29. 3 billion ) is anglo ( and, this bank being in a wind - down mode, that figure does not include an additional €5 billion of announced potential losses in a stress case ). although aib ’ s cumulative requirements are not far behind at €27. 2 billion, this does reflect the higher target capital ratio set for going concern banks in a stress scenario ; furthermore, anglo ’ s reported pre - crisis total assets stood at €96. 7 billion : much lower than the €177. 8 billion reported by aib. as such, anglo ’ s overall loss experience was much worse than aib. the other large going concern entity bank of ireland loss rate had to meet €11. 4 billion of additional capital requirements, which may be compared with its pre - crisis total assets of €197. 4 billion. towards pcar2013 in all banking systems around the world, evolving international standards has tended to increase required capital levels ( especially for core capital – those elements that can absorb losses while the bank continues to be a going concern ). growth of the business also means a need for more capital. in normal circumstances, the additional capital can be generated through retained earnings or by issuing new equity in the market. when conditions return to normal, this will be the case for irish banks too. but for the present, their profitability and access to additional equity has been limited. there is also the question of keeping track of and responding to any deviations in the actual and prospective loan - loss situation by comparison with what has been assumed in pcar 2011. pcar2013, employing a further refinement of methodology, embodying recent work on loan arrears migration and the results of a micro - data survey of indebted households, will allow capital requirements to be updated on a more secure basis. an emphasis on the effectiveness of bank loan recovery and the management of mortgage and sme arrears will also become more central. the more effective the banks are proving to be in managing problem loans, the less the required capital is likely to be. the likely enactment during 2012 of new personal insolvency legislation could affect behaviour in relevant ways, behaviours that should be taken into account in the loan - loss models. the passage of time will also help to narrow the remaining range of uncertainty somewhat, although the deterioration in global economic conditions since pcar2011 and waves of