##udential measures, in particular borrower - based instruments, can help to slow down the build - up of vulnerabilities, but cannot fully prevent their increase. this is one of the reasons why it is so important to ensure adequate banking sector resilience. let me now turn to this important aspect. strengthening banking sector resilience banking sector capitalisation has increased in many countries since the gfc, thanks both to the capital - based instruments put in place after the gfc and to voluntary buffers held by cf., for example, galati, g. and r. moessner ( 2018 ), what do we know about the effects of macroprudential policy? economica, 85 : 735 - 770 ; b. richter, m. schularick and i. shim ( 2019 ), the costs of macroprudential policy, journal of international economics, 118 : 263282 ; ampudia, m., m. lo duca, m. farkas, g. perez quiros, m. pirovano, g runstler, and e. tereanu ( 2021 ), on the effectiveness of macroprudential policy, ecb working paper series 2559. behncke, s. ( 2022 ), effects of macroprudential policies on bank lending and credit risk, journal of financial services research. ibidem. banks ( cf. slide 2 ). as a consequence, banking sector resilience to shocks is now much larger than before the gfc. stress tests conducted by many central banks indicate in fact that bank capital is likely to be sufficient to cover potential losses under severe stress scenarios. 9 at the snb, we also regularly conduct stress tests for the swiss banking sector. results, reported in our annual financial stability report, suggest that most banks have adequate capital buffers to absorb losses under adverse scenarios, in particular also in the event of an abrupt and steep interest rate rise combined with declining real estate prices. this implies that banks could withstand the shock, and still fulfil their key role as credit providers to the real economy. the coronavirus pandemic has highlighted the importance of banking sector resilience. despite the elevated uncertainty prevailing at the onset of the pandemic, market participants remained confident in the banks ’ ability to absorb potential losses resulting from the pandemic and to continue at the same time to fulfil their role as credit providers. 10

its success. through the ngfs we have been able to share practices and increase our understanding of the implications that climate change has for central banks and supervisors, contributing to the inclusion of these risks in our micro and macro - prudential supervisory official monetary and financial institutions forum. 4 / 5 frameworks. notably, the ngfs has produced three key reports, which include recommendations not only for central banks and supervisors, but also the industry. we also have today with us the chairman of the ngfs, mr. frank elderson, who is likewise a member of the ssm9 supervisory board, where we sit together. i am aware that frank receives innumerable requests to speak on behalf of the ngfs, so i am also very grateful for his presence here today. let me conclude. climate change is a global phenomenon and all of these initiatives evidence the fact that cooperation is key. of course, official institutions and governments must cooperate, but so too must the public and private sectors. we are all together in the same boat, this planet, so we must also learn and work together to achieve the same shared objective. the banco de espana is aware of the importance of this challenge, and is also developing its own strategy : it is analysing the possible implications of climate change for the stability of the spanish financial system, assessing data gaps and developing the methodologies and responses it may adopt in its micro and macro - supervisory role. we have also been conducting several initiatives to help raise awareness of the importance of this issue, including workshops and meetings with the industry to learn more about how the sector is coping with climate change. despite all these efforts, there are still obstacles and methodological challenges to overcome. these include the longer and uncertain horizon that must be applied to assess these risks, and the finalisation of a common taxonomy enabling us to distinguish what is " green " and what is " brown ". i am sure our outstanding speakers today will help us to shed light on these issues, and i look forward to the discussions this morning. as i mentioned earlier, the slogan of the united nations climate change conference, cop25, is “ time for action is now ”, so i believe it is time for me to stop talking and move to lord stern´s presentation. thank you very much. single supervisory mechanism. 5 / 5