burkhard balz : closing words third deutsche bundesbank / european central bank / federal reserve bank of chicago conference on ccp risk management closing words by mr burkhard balz, member of the executive board of the deutsche bundesbank, at the third deutsche bundesbank – european central bank – federal reserve bank of chicago conference on ccp risk management, virtual event, 3 march 2021. * * * 1 introduction ladies and gentlemen, on behalf of the deutsche bundesbank, the european central bank and the federal reserve bank of chicago, i would like to thank you for participating in the third joint conference on ccp risk management. “ don ’ t cry because it ’ s over. smile because it happened, ” quoting author dr. seuss. a very interesting conference day with fruitful debates and intense discussions on current and future challenges in ccp risk management is coming to an end. i now have the honour of concluding today ’ s conference. 2 how to learn from the current crisis and manage future challenges in such dynamic times, i think it is important to pause briefly and take a moment to look back and reflect. much has changed since last year ’ s conference. in past years, many participants had to travel long distances to attend the ccp conference in frankfurt ; today it only took a mouse click to get in. i am quite sure that these new opportunities will survive beyond the current crisis. the coronavirus outbreak hit us unexpectedly and quickly evolved from a local problem into a global crisis. for almost a year now, the pandemic has had a firm grip on all our lives. in the meantime, we have got used to the new “ normal ” : social distancing, wearing masks and – of course – working from home. our conference today has also taken place virtually and despite everything, the event has gone smoothly and enabled a lively exchange. covid - 19 is merely the most recent challenge. but, not to forget, on the top of that there have been multiple issues within the last decade. the consequences of the financial crisis of 2008 – 09, dramatic climate change and geopolitical developments, notably brexit, are also having a profound impact on our industry. moreover, it has become abundantly clear that it is important to work jointly on future issues and to prepare adequately. with this in mind, please allow me to briefly walk you through today ’ s topics and some key takeaways that deserve further consideration and elaboration

both within the regulatory community and the financial services industry. today ’ s conference focused on three broader topics, which were covered in separate sessions : lessons learned from the covid - 19 crisis, climate change risks in financial markets, and a changing clearing landscape. although the covid - 19 crisis took us by surprise, it offers valuable lessons for the future. especially in the beginning of the pandemic, markets were very volatile across the globe. ccps did well despite challenging financial and operational conditions. besides, ccp models and parameters have broadly worked as designed and adapted quickly to the new market conditions. 1 / 3 bis central bankers'speeches however, we observed a significant increase in margin calls. in fact, margin calls almost doubled at the peak of volatility. nevertheless, there were no significant defaults that would have jeopardised the financial system. this demonstrates that the infrastructure has proved to be quite robust and that clearing members are significantly better capitalised and more liquid than during other crises. having said that, relying on the fact that ccps have managed the current crisis well, is not enough – at least to my understanding. especially because ccps are an extremely crucial market infrastructure for a robust financial system. we as regulators, as well as ccps and market participants, must work together to make the current processes even more resilient and flexible. some critical areas should be subject to further scrutiny – for example, ccp risk management frameworks, procyclicality and the capacity of default waterfalls to absorb losses. just like the covid - 19 crisis, climate change risk is an emerging issue that we need to pay more attention to. climate change is one of the biggest challenges of our time and needs to be dealt with on a global scale. failure to mitigate the negative effects of climate change and to adapt to a new environment is considered by the world economic forum to be among the top five risks to the global economy. ccps will undoubtedly be affected by climate change - related risks in the global economy and financial markets. consequently, it is crucial to anticipate negative effects for the financial sector at an early stage. addressing potential climate risks should already be part of an effective risk management by ccps. this should apply to all ccps and not only those active in the commodity market. ccps, as important financial players, could also help steer market participants towards more sustainable and climate - friendly investments by offering more sustainable products and services. i am convinced