claudia buch : welcoming remarks - macroprudential conference welcoming remarks by prof claudia buch, vice - president of the deutsche bundesbank, at the macroprudential conference 2019, eltville, 21 june 2019. * * * the bundesbank is very proud to be hosting the macroprudential conference series for the first time, and i would like to take this opportunity to welcome you all here in eltville. from my perspective, the tradition of these conferences, which were initiated by the dutch national bank and the swedish riksbank, has two particularly important features : the first is close interaction between policymakers and academics. in many ways, macroprudential policymaking has entered unchartered territory, and policy developments have often leapfrogged analytical work. a close dialogue between researchers and policymakers is thus essential in order to understand how our existing policy tools are working, to identify whether we are missing any relevant channels, and to learn more about the functioning of the financial system, particularly in times of stress. the second feature is the need for cooperation. it has been emphasised repeatedly that macroprudential policy is a necessary complement to microprudential supervision with regard to providing a system - wide perspective on the resilience of the financial system. this system does not end at national borders. international cooperation and coordination is thus crucial when it comes to macroprudential policymaking. let me give you two examples which demonstrate that such policy coordination is in fact working – and highlight the value of interaction with academia. 1 coordination of macroprudential policy nationally and in europe macroprudential policy is a core element of the post crisis reform agenda, and it plays a particularly important role in the european monetary union which lacks a single sovereign ( buch and weigert 2018 ). it is not enough to focus on the sustainability of public debt – mechanisms are needed to safeguard the stability of the financial system. such mechanisms ensure that private credit is sustainable and that the failure to service debt does not pose a threat to the stability of the financial system. macroprudential policy has exactly that objective : preventing the build - up of systemic risk, i. e. the risk of destabilising negative externalities in the financial system, and preventing excessive leverage of the private sector. macroprudential policy takes a macroeconomic perspective on the financial sector ’ s health and resilience. it complements monetary policy and micro

forward any solution should look to meet four objectives ; restoration of confidence – it is essential that any solution furthers the restoration of confidence. customers must have confidence in the future of the bank of cyprus whether it is one bank or two. as confidence is re - established we can further ease and ultimately lift capital controls. funded balance sheet – the bank of cyprus ’ s reliance on emergency support is well known. any structure needs to be funded. the use of emergency support should be reduced over time. maximise value – the bank of cyprus has received substantial capital. it needs to manage its loan book, restructure loans and maximise value. this will not be best achieved through a fire sale. support the economy – as the largest and most important bank in the country the recovery of the bank of cyprus is vital to the recovery of cyprus. the bank must continue to prudently lend to business and consumers. bis central bankers ’ speeches the cypriot economy and the bank of cyprus have undergone a severe shock. however, both cyprus and the bank are resilient and can emerge strongly. it is important to recognise that substantial progress has been made. the bank of cyprus is now adequately capitalised and has exited resolution. new management is in place and they are working on preparing the strategy and restructuring plan. the ecb ’ s governing council has recognised the steps taken to restore confidence. continuing the efforts to create a stronger and safer bank of cyprus is in all of our interests. i look forward to hearing the panellists ’ views on how this can best be achieved. bis central bankers ’ speeches