to the programme here in russia, a eurosystem programme on basel ii is under way involving the central bank of egypt. a crisis response package covering banking supervision and financial crisis management is being conducted with south - eastern european countries. and technical assistance is being given to a number of would - be eu members. europe strengthens its institutional framework for financial stability generally, europe has responded to the challenges of the past few years in a structured and thoughtful way. the creation of the european systemic risk board ( esrb ) broadens the scope of cooperation and institutional awareness in respect of macroprudential oversight. the ecb is the supporting institution and provides, inter alia, analytical and statistical inputs to the esrb structures. the risk board enables european regulators and supervisors to bis central bankers ’ speeches complement the microprudential perspective with a systematic monitoring and assessment of potential dangers to the stability of the system as a whole. the discipline of macroprudential supervision combines the information and assessments obtained via microprudential supervision with macroeconomic and monetary insights. we expect macroprudential measures, such as countercyclical provisioning, to mitigate systemic risks. we also expect the findings of macroprudential oversight to feed into the microprudential work that alerts supervisors and the wider world to macroeconomic risks. besides setting up the esrb, on 1 january this year, three european supervisory authorities ( esas ) came into being : the european banking authority, the european insurance and occupational pensions authority and the european securities and markets authority. we expect that these new institutions will sustainably enhance microprudential supervision in europe. currently, the eu and euro area financial system continue to face several important risks. the main source of concern is the interplay between fiscal imbalances, downside risks to economic growth and bank funding vulnerabilities. although this interplay is limited to a small number of euro area countries, with a relatively small share of total eu and euro area gdp, potential contagion to other eu or euro area countries is not insignificant. in this respect, let me state how surprised i am to see how quickly some of the lessons of the crisis are being forgotten. one of the lessons is the need to assess risk in a systemic way, not only at the micro level. there can be no systemic assessment without taking contagion into account, across instruments, across markets and across countries. the sub - prime crisis or the collapse of lehman

that need it most. to protect the continued flow of credit to the real economy, considerably more favourable terms will apply to all tltro iii operations1 outstanding between june 2020 to june 2021. in particular, this should benefit lending to small and medium - sized enterprises. we have also introduced additional longer - term refinancing operations ( ltros ) to ensure that there is sufficient liquidity in the financial system. this should support banks in the current phase of heightened uncertainty. finally, we have taken a number of collateral easing measures to ensure that banks have sufficient collateral to participate in the eurosystem ’ s liquidity operations. 2 we have increased our risk tolerance to support bank funding against loans to corporates and households. this will be achieved by expanding the use of credit claims as collateral and through a general reduction 1 / 3 bis central bankers'speeches in collateral valuation haircuts. the governing council is committed to doing everything necessary within its mandate to help the euro area through this crisis. it is fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as long as needed. it will explore all options and all contingencies to support the economy through this shock. euro area banking sector developments thanks to the efforts made after the global financial crisis, euro area banks now have more robust capital and liquidity positions than they did in 2008, with sufficient capacity to absorb loan losses similar to those seen in the wake of that crisis. together with national authorities, we have also taken supervisory and macroprudential measures to enhance the euro area banking sector ’ s ability to absorb losses and provide necessary support to the real economy. the possibility of operating below the level of capital defined by the pillar 2 guidance, as well as the immediate implementation of rules on the composition of pillar 2 requirements under the new capital requirements directive v, will provide capital relief of €120 billion that will enable banks to finance loans to households, small businesses and corporate customers. through the release of countercyclical capital buffers, systemic risk buffers and buffers for systemically important institutions, macroprudential measures are contributing a further €22 billion of capital. we have also recommended that banks neither pay dividends nor buy back shares until at least october 2020, a move which would retain approximately €30 billion of capital. the current measures imply using the flexibility that is built into the existing framework in order to help the banking sector weather these difficult economic circumstances