consider whether we should introduce such changes. i also strongly believe that now is the time to discuss whether macroprudential policymakers are prepared and whether they have the necessary tools to mitigate climate - related risks to financial stability. it is worth noting that we still lack clear evidence on the degree to which the macroprudential measures address these risks, especially when interactions with other policy areas are accounted for. to wrap up, this is the fourth macroprudential conference, and i am glad to see that the agenda is filled with interesting sessions with speakers from many different institutions. i wish us a fruitful exchange of views, hopefully leading to constructive policy outcomes. and now i ’ m excited to open the floor to these highly needed and well - targeted discussions. more : www. lb. lt / en / speeches - interviews - presentations / speech - by - gediminas - simkus - atmacroprudential - policy - conference - 2021 5 / 5 bis central bankers'speeches

systems domestically and with foreign countries. in most countries these are he main objectives of central banks. this role is important because shocks to the banking and financial system are closely linked to changes in the value of financial assets, interest rates and the exchange rate. the central bank ’ s monetary policy measures and information systems enable it to evaluate the risk of financial shocks and warn against them. the central bank published two reports on financial stability in monetary bulletin last year, in may and november. the broad finding was that the position of the financial system strengthened during the year, and a new report published last week indicates that the position of major financial companies and markets is relatively firm. macroeconomic conditions are favourable on the whole. the main concerns are the expansion in largely foreign - financed lending, and high asset prices. there has been a noteworthy flurry of leveraged buyouts of listed and unlisted companies, which provide one explanation for the surge in lending by banks. these transactions have driven up equity prices of several listed companies, including financial companies, prompting the question of what the impact will be should share prices head back down. housing prices in real terms have stopped climbing in the greater reykjavik area, for the time being at least, but a substantial drop is unlikely in the near future. asset price developments are an important factor for financial stability assessments and may also influence monetary developments, especially in an economic climate such as the present. a decline in equity and housing prices could serve to counter potential overheating of the economy in the next few years. the main shock to financial stability and monetary policy would be if asset prices were to drop sharply at the same time as the growth of real disposable income slows down at the end of the aluminium - related investment boom. lending developments as i mentioned before, lending growth is a cause for concern, both for financial stability and the central bank ’ s inflation target. domestic lending grew at a brisk pace in 2003 and this development appears to be heading in the same direction this year. total domestic lending by deposit money banks over the twelve months to the end of january increased by about 23 %, which is above a rate consistent with longterm price stability and economic stability. the period 1998 to 2001 provides a recent example of the consequences of heavy credit growth. both arrears and loan losses rose in the wake of the credit boom, leading to a temporary tightening of the commercial banks ’ and savings banks ’ foreign funding. while the recession and the ensuing strain on