that would permit supervisors to extend the time between on - site examinations to eighteen months for well - managed and well - capitalized banks with up to $ 500 million in assets. this change would double the current size threshold and has the potential to allow roughly 1, 200 more community institutions to qualify for the extended examination cycle. in my remaining time, i would like to discuss some of the key financial and risk - management challenges that we have identified through our supervisory activities. banking has always been a business of taking and managing risks, but evolving market and economic conditions affect the types of opportunities available. in recent years, community banks have become more focused on commercial real estate lending, leading to a significant shift in the balance sheet and risk profiles of growing numbers of banks. in most local markets, commercial real estate loans have performed well. our examiners tell us that lending standards are generally sound and are not comparable to the standards that contributed to broad problems in the banking industry two decades ago. in particular, real estate appraisal practices have improved. however, more recently, there have been signs of some easing of underwriting standards. the rapid growth in commercial real estate exposures relative to capital and assets raises the possibility that risk - management practices in community banks may not have kept pace with growing concentrations and may be due for upgrades in oversight, policies, information systems, and stress testing. in response to these developments, the federal banking agencies have recently proposed guidance that would focus examiners'attention on those loans that are particularly vulnerable to adverse market conditions - - that is, loans dependent primarily on the sale, lease, or refinancing of commercial property as the source of repayment. i emphasize that, in proposing this guidance, supervisors are not aiming to discourage banks from making sound loans in commercial real estate or in any other loan category. rather, we are affirming the need for each bank to recognize the risks arising from concentration and to have in place appropriate risk - management practices and capital levels. adjusting to changes in the level of short - term interest rates can also pose challenges to community banks. thus far, the relative stability of community bank net interest margins suggests that they have done a good job of managing their interest rate risk exposure throughout the recent increase in market rates. importantly, most community banks have effectively controlled the maturity distributions of their assets and made significant improvements over the past decade to their management and measurement of interest rate risk. certainly, the procedures employed by community banks today are significantly more

lending to related parties, restriction on banks to carry out financial undertakings secured with its own shares, restriction on strict fit and proper rules for board members and so on. strict regulations and effective supervision are a key to the public trust. i think it is now widely accepted that it was appropriate to give the responsibility for financial supervision to the central bank. the supervisor is much stronger having the central bank behind it which also allows for a much stricter enforcement. the fifth lesson is that consensus with the labor market improves policy trade - offs. the scandinavian approach is to have general centralized wage bargaining, which is something we have struggled with in iceland in many ways, but in march 2024 a four - year wage contract was negotiated reached between the main labor market participants which we hope will assist in the fight against inflation and bringing it to target. the central bank policy rate stands at 9. 25 % and inflation is still much too high, hovering around 6 %, but projected to subside. the sixth lesson is that monetary policy needs political support, that is support from the political establishment and the public. in a way, the central bank still faces the legacy and the memory of the crisis. indeed, the central bank has had full support from the political establishment so far and in my opinion, from the public as well in carrying out its mandate and policies after the new central bank act came into force in 2020. monetary policy and other bank policies can never be a private matter of what we economists or appointed officials support or decide. they must have public support. without public support, it is very difficult for the central bank to carry out its responsibilities. as i said, and to conclude, we have faced many challenges, and i would think that my predecessor sitting here in the audience would agree. since i took office, five years ago, we have faced many shocks : from covid and the effects of military conflicts abroad to volcanic eruptions at home, but also positive supply shocks because after covid iceland experienced positive trade terms and trade shocks. the world market price on marine products and on aluminum and power rose markedly. we have experienced very rapid growth, a very tight labor market, and we have had to tighten policy, both monetary and macroprudential policy. one can always wonder or think how much authority can be given to the central bank. how much authority can be given to un - elected officials, meddling with housing policy, affordability of housing for example, or how lending is managed. nevertheless