event. all the more important, then, to draw lessons from what happened to credit suisse. that is why the fsb has begun evaluating how the us and swiss authorities responded to these recent events – to identify lessons learned and shed light on potential obstacles and areas for improvement. the fsb is currently assessing cross - border coordination mechanisms, which we view as a key factor in relation to crisis management. it is essential that these mechanisms are in place so that banks are resolvable not only on paper but also in practice. another lesson we can learn from both svb and credit suisse is that poor internal controls, risk culture and governance are at the root of other deficiencies in banks. weak decision - making procedures and the absence of a healthy challenge culture hamper effective governance and strategic steering, which can ultimately lead to a bank failure. events are opportunities to learn – to improve is to change. this means that we need to remain alert. this obviously goes for supervisors, but also for the banking sector itself. we not only have to keep learning from past events, but we must also think about what might happen in the future – about risks and vulnerabilities that are lurking just around the corner. consider the rising interest rates, for example. while higher interest rates generally benefit financial institutions, the pace of the recent 3 / 5 bis - central bankers'speeches increases and the adjustments financial markets and institutions need to make as a result are cause for concern. after a period of abundant liquidity, these adjustments can amplify shocks to the system. the elevated debt positions that governments, companies and households have accumulated also constitute a major potential vulnerability. corporate and government debt ratios in the euro area are currently 75 and 92 percent respectively. government debt in particular saw rapid growth during the pandemic. in a low - interest environment, this additional debt would be easy to deal with. but with rising interest expenses, it could cause problems. this is particularly true for large debts that need to be rolled over and reinvested in the short term. these problems would affect our societies, our business communities and our economies, but they would also affect you – our banks and other financial institutions. after all, much of the debt that governments and corporations have accrued is owed to yourenewed volatility in the financial markets could also spell trouble. investors have so far been very optimistic about inflation. the general expectation is that we will have returned to the target level of 2 percent by

klaas knot : to improve is to change speech by mr klaas knot, president of the netherlands bank, at the international banking summit, brussels, 1 june 2023. * * * " many forms of financial systems have been tried, and will be tried in this world of sin and woe. no one pretends that the current financial system is perfect or all - wise. indeed, it has been said that this system is the worst, except for all those other systems that have been tried from time to time - " yes, this sounds familiar : it sounds like that famous winston churchill quote about democracy. but i am sure this is what he could have said – and would have said – had he been a banker - he would have been a formidable one. i can almost see him sitting there in the front row, puffing on a fat cigar. grumbling about novelties like bitcoin and timecoin. reminding us again and again never to waste a crisis and never to give inif he had said this about our financial system, he would have been right. because i am convinced that our financial system, warts and all, is better than many alternatives. it has been tried and tested. by inflation and recession, by bank runs and financial crises, by innovation and incompetence. and we never gave in. because we learned, we know, that as money makes the world go round, the system that regulates and oversees that movement cannot stand still, but has to stay in constant motion. it has to change with the times, adapting to new demands from the public and changing political tides. as churchill really did say : " to improve is to change, to perfect is to change often. " our financial system has to be able to absorb change, to withstand shocks and address vulnerabilities. in other words : the global financial system has to be resilient. and to be resilient, financial institutions have to be well capitalised – because they too must be able to handle shocks. to achieve that resilience, financial regulators focus on vulnerabilities rather than on risks. we identify those vulnerabilities through rigorous monitoring, but they can also be exposed by certain events. events of all shapes and sizes. each event, each change, each shock gives us new insights – we learn lessons that help strengthen the stability of the financial system. to improve is to changethe changes we implemented during and after the