. this nexus opens the debate on the so - called " financial dominance ", the possible tradeoff between rising costs to curb inflation and effects for financial stability. against this background, one of the key questions is how well are financial systems prepared to rise to the challenge of rising interest rates. the answer to great extent boils down to the health of the balance sheet of households, companies and banks, i. e., their capacity to absorb shocks. what is very important is that banking systems in the region weathered the pandemics shock well and in many countries, including in nm, emerged with even stronger capacity, which can be observed by higher capital and liquidity buffers and better quality of credit portfolio. although according to the recent eib surveys banks expected deterioration of credit quality, npl ratios have remained low ( below 4 % ). still, given the elevated debt levels of the private sector that hovers around 80 % of gdp, increase in real estate prices, which in cesee reached 15. 5 % - the highest growth since the gfc, as well as 2 / 4 bis - central bankers'speeches expected further tightening of the credit conditions, it is not time for complacency. one of the key lessons learnt from the covid 19 crisis is the resilience and it must remain the name of the game for the banking sector going forward. in the current context when the interplay between monetary policy and financial stability is more complex, and trade - offs are larger, macro – prudential management plays an important role. a recent bis paper finds that prudential policy tightening, ahead or during the monetary policy tightening, reduces the likelihood of financial stress and provides more headroom for monetary policy. following the pandemics, countercyclical or systemic risk capital buffers were actively deployed across the region. financial regulators in seven countries, including in our case, intervened with the countercyclical capital buffer4, in six countries ( bulgaria, croatia, romania, slovenia, serbia and montenegro ) have continued to apply or introduced the systemic risk buffer and in five countries implemented borrower - based measures5, which more directly affect the quality of credit demand and contain risks. keeping banking sector sound and in good capacity to lend is important in the light of the urgently needed structural reforms in the region. as we are lagging behind advanced europe in terms of income and productivity, sustaining banks'financing can contribute in narrowing those gaps. at the same time,

change and deforestation in agriculture and livestock extension. the air, ocean, and soil pollution, unsustainable fisheries, and the pressures of unorganized and unplanned urbanization also take their toll on biodiversity. our non - renewable and renewable wealth are economic assets we need to include to manage adequately. issues in america latina these problems are acute not only in mexico but in other emerging markets and lowincome countries, like brazil, colombia, peru, and venezuela, to mention a few in latin america. 2 / 5 bis - central bankers'speeches currently, numerous projects are aimed at addressing the risks of climate change and loss of biodiversity ; however, many are isolated and need more. this is where the private financial sector can help, and financial innovation is critical in accessing and tapping international capital markets to protect and restore nature. biodiversity, investment, and financing the increasing public scrutiny of corporate investments is a powerful incentive for the private sector to align their business decisions, as they may face reputational risk. on the other hand, financial institutions may be exposed to lending or investments that negatively impact biodiversity. for our part, there are significant challenges for financial regulators and supervisors that include : bridging the data gaps, supporting the assessment of the value of ecosystem services in different industries, creating the skills and capacities to analyze biodiversity risks, supporting the development of innovative solutions to finance the conservation and restoration of biodiversity, and building the necessary financial architecture for efficiently mobilizing capital and investments contributing to global biodiversity conservation. nowadays, there is a significant build - up of momentum and a positive change of attitude towards biodiversity and natural capital. we see it in work being done to develop data and information needed for economic and financial analysis and decisionmaking. market - led institutions are welcome. for instance, the market - led task force on nature - related financial disclosures ( tnfd ), of which banco de mexico has been a forum member since 2021, is tackling the complex problem of governance and strategy issues, addressing risk analysis from biodiversity degradation, and identifying data and metrics for the corporate world. the tnfd emulates and has the same pillars as the influential task force on climaterelated financial disclosures ( tcfd ), which in 2017 published its mission : "... to develop and deliver a risk management and disclosure framework for organisations to report and act on evolving nature - related risks and opportunities, with the ultimate aim of supporting a shift in global financial