central bankers'speeches to mention just a few parameters : common equity tier 1 ratio of significant institutions rose from close to 13 % in 2015 to almost 16 % today. aggregate liquidity coverage ratio is now further above the regulatory minimum. quality of banks'assets has also improved significantly with the share of nonperforming loans of si's somewhat above 2 %, well below 7 % observed in 2015. at the same time, i am well aware that other policy measures have also contributed to banks'resilience. european banking sector has also indirectly benefited from strong policy support, which has helped shield the real economy from adverse shocks and more directly, sequencing of our monetary policy measures has impacted banks balance sheets in a substantive way as well. against such backdrop, our attention has shifted towards medium - term challenges. and i would like to highlight three areas, which are of particular importance. the first one to mention – and not necessarily the priority one – is related to the architecture of the eu and euro area. the ssm was established on the premises of a broader institutional framework, which is the economic and monetary union complemented by a three - pillar banking union as well as capital markets union. while much has been achieved on the first two pillars, the third pillar and with it the whole banking union remain incomplete. at the same time, progress is needed on capital markets union. the past decade was a decade of intense discussions and while several attempts were made to implement it, unfortunately, we have not progress beyond discussions and attempts. the second challenge i would like to mention is related to fast - changing environment the banks are operating in. digitalization of society in the last decade has been astonishing. and more recently, ai technologies are rapidly evolving their applications and gaining users. it is not just banks that must adapt to a speedily digitalizing society, including financial sector supervision and supervisors need to evolve as well. we must ensure we are equipped with the right tools and skills for the future. the third topic which demands our increased attention is climate risk. what is astonishing is a rapid change in the tone of the debate in the past decade. if we were faced with a lot of skepticism in the early days, the debate has now almost completely changed – from analysis of the problem to discussion of the solutions. the hard work of the ecb, ssm and the ncas in this area is widely recognized and i can proudly say that banka slovenije is also participating to the best of

inflationary pressure via import prices, for example. a given exchange rate trend may well support monetary policy ’ s drive for price stability ; when this is not the case, however, the riksbank has to intervene and adjust the repo rate. at the same time, the exchange rate is the price of an asset that is current throughout the economy ; the value of the krona is highly important in many economic decisions, not least for export companies. this makes a stable exchange rate fundamentally desirable. it is then easier for all economic agents to make decisions. all else equal, this should lead to higher growth. - 5to this basic endeavour to keep the price of the krona stable should be added our european undertakings. as a member of the european union we are committed to treating our exchange rate policy as a matter of common interest. opinions in the union presumably differ from time to time about the practical application of this commitment but the basic requirement is that policy focuses consistently on stability. the riksdag has left the door open for sweden ’ s participation in the monetary union at a later date and stated that in connection with such a move it can be relevant to join the european exchange rate mechanism ( erm ). in this perspective, too, it is an advantage if the krona is more or less stable. monetary policy in the euro area is to have the primary objective of price stability. we do not yet know just how the european central bank ( ecb ) will formulate its target but it is unlikely to differ from the norm that has applied in germany since the mid 1980s. this means that inflation is not to exceed a medium - term level of 2 per cent. in practice, therefore, the differences in this policy field between the ecb and sweden will probably not be so great as to have any real consequences for the exchange rate. with policy focused on price stability both in sweden and in the monetary union, there should be good possibilities of a stable exchange rate between the krona and the euro. this is supported by the path of the krona relative to the german mark in recent years. as measured, for example, by the long - term interest rate differential with germany, confidence in swedish economic policy has been high since 1996. in this period there have been only two occasions when the krona has fluctuated more than 2 per cent against the german mark. managing transitory effects the subject of the riksbank ’ s attitude to the inflation target is also raised