’ s banking supervision particularly, must remain vigilant in supervising the banking system generally and the mortgage - lending industry specifically. the structure of israel ’ s mortgage - lending market is different today than it had once been, and it is important to understand the risks that exist today, address them, and avoid complacency arising from the thought that this market was once considered especially stable. the bank of israel is duty - bound by law to maintain financial stability in the economy at large. in this context, the concept of macroprudential supervision – supervision of stability at the macro level – has been mentioned recently. this concept means that even if the situation in any particular market or financial institution may look good, systemic problems that endanger overall stability may exist. in the u. s., for example, people thought that the subprime market was relatively small and that lehman brothers ’ balance sheet was not especially big. both of them, however – the subprime market and lehman brothers – ultimately dealt the system a very grave blow when they collapsed. the bank of israel has already taken macroprudential steps in regard to the real - estate market and the government has taken measures that should increase housing supply. at the moment, there are indications – no more than indications – that the housing market is leveling off. current data from various sources are painting contrasting tableaux ; we need to wait for the situation to become clear. if we find that real - estate prices are continuing to rise rapidly, we will have to take additional measures. we are also concerned about the growing use of nonbank credit to finance property investments in eastern europe. complacency, as stated, is highly dangerous in this context. even if no financial institution has collapsed in the current crisis in israel, we should remember that it was a damn close run thin. we were forced, for example, to unfurl a safety net for the pension funds during the crisis, some domestic corporate bonds had to the reorganized, and so on. one cannot rely on the regulators only. the key to a safe banking system is risk management at every bank and every financial institution individually. we need to remember that bad loans are issued in good times. an important part of learning the lessons from the crisis takes place at the international institutions. the center of gravity in the global economy is shifting from west to east and this finds expression at the international agencies as well. these entities engaged, for example, in developing systematic bankruptcy

climate - related damages are expected to go up due to an increase in the frequency and intensity of severe weather events. this means that insurance premiums may have to go up and that insurers may need to hold more capital, as they hold capital for severe events. we also found that models currently being used by insurers to predict damages do not adequately take climate change trends into account. in terms of the energy transition, we warned of risks stemming from new sustainability legislation for offices. the dutch government requires office buildings to have a minimum energy label of c as of 2023. this means that all office buildings that don ’ t meet this requirement now, have five years to reach the required level, or their cash flows will dry up. our financial sector finances large chunks of the real estate sector. when cash flows dry up, that will jeopardize the value of these loans. so how big is the problem? we found that on average 46 % of bank loans to commercial real estate parties, has an energy label of less than c, representing some 6 bn euros. these loans run serious risks the coming years, and banks need to manage this risk. in doing so, by the way, they will discover, indeed they of course already have, that there are also ample and sound business opportunities to help their clients meet these legislative deadlines, thus creating a win win situation for business and climate. but that ’ s not all. as a follow up to this work, we are right now developing both physical and transition related stress tests. and we hope to present the results of the physical stress test in the coming few months. we ’ ve also done some work on the broader question of sustainable finance. about a year ago we published a report on responsible investing in the pension sector. this was based on a requirement in dutch law for pension funds to be transparent as to whether and how pension funds take esg factors into account. we assessed whether indeed all pension funds included their esg investment policy in their annual report, and we shared the good practices that we saw. last but not least, using our convening power, we ’ ve founded a national platform for sustainable finance, which brings together our government, supervisors and industry representatives from the entire financial sector. the aim of this platform is to promote and encourage a dialogue on sustainable finance in the financial sector. in addition, the platform also allows for financial institutions to form cross - sectoral working groups to tackle existing problems. one