svb was much faster than expected – much faster than lcr calculations take into account. which raises the question : should the lcr be calibrated differently? should we assume higher outflow rates? and do we need to improve our stress tests? we might also ask ourselves if there are shortcomings in the way we look at interest rate risk and the mismatches banks have on their balance sheets. in europe, the basel standards for interest rate risk have been introduced through the institution - specific pillar 2 requirements, and they apply to all banks. the recent turmoil underlines the importance of this regulation, as well as the need for continued vigilance. are we sure that the underlying assumptions for customer behaviour and deposit duration are conservative enough in today's digital world? banks should monitor very closely the assumptions they make when managing interest rate risk and adjust those assumptions if there is reason to do so. 2 / 4 bis - central bankers'speeches and finally, should unrealized losses – that is the difference between market value and the valuation based on historical cost – should those unrealized losses be better reflected in the capitalization of banks? and should we look at how instruments that are not marked to market daily are reflected in liquidity buffers? it would be for example useful to tighten the use of these assets as high - quality liquid assets. these are all valid questions that i think should be addressed. so that we can learn everything there is to learn from what happened at svb. let me now turn to this side of the atlantic, where we had our own shattered windshield. shattered by credit suisse, a bank that had suffered from a series of mismanagement problems in recent years, and that experienced previous outflows of deposits at the end of 2022. here, too, we witnessed a rapid succession of events. it took, almost literally, only one tweet to lead to the downfall of credit suisse. deposit outflows quickly followed, the share price fell and the cds spread spiked. in the end, the swiss national bank provided additional liquidity assistance, and credit suisse was sold to ubs. finma, the swiss supervisor, came with a write - down of credit suisse's at1 securities. the bank was not bailed out. instead capital providers contributed significantly to its restart, exactly as intended by the new legislation after the global financial crisis. at the same time, things did not go as smoothly as

we had hoped. the decision by finma took investors by surprise. despite the fact that the possibility of such a principal writedown had been included in the relevant at1 prospectuses and mentioned on the bank's investor relations page. and despite the fact that investors had been informed that extraordinary public support could lead to such a write - down. to me, this shows that we need to reflect on the role and functioning of at1 instruments in determining the capital position of banks. another lesson we can learn from both svb and credit suisse is that internal controls, risk culture and governance are root causes that may bring up other deficiencies in a bank in a later stage. if there are several passengers pulling at the wheel as the car is about to drive off a cliff, airbags and seatbelts aren't going to help you. so banks need to be aware of their decision - making procedures and promote a healthy company culture in order not to hamper effective governance and strategic steering. that's why i firmly support that risk culture and governance are priorities in the banking supervision by the ssm. looking at everything that has changed in the european banking sector since 2008, i think we are in a different situation now. european banks have stronger capital positions and the change in interest rate environment is in principle good news for the banks business models. also, european supervisors are well aware that the ongoing, fast - paced changes in monetary policy conditions are increasing our banks'exposure to interest rate risk. within the ssm, we therefore started assessing interest rate risk as early as the second half of 2021, when the first signs of inflationary pressure emerged. and in 2022, interest rate risk was included in our supervisory priorities. so these are all positives. 3 / 4 bis - central bankers'speeches but there is absolutely no reason for complacency. interest rates are still rising, and this leads to risks related to funding costs and interest rate sensitivity, or credit - related risks. and the high level of debt and interconnectedness in the system creates vulnerabilities, as well as a large number of unknown unknowns. not to mention the long - term structural challenges we face, like climate change, the transition to a sustainable economy and the ongoing digital transformation. this means that we need to remain vigilant. in the first place, this goes for the banking sector itself, which needs to make sure that its capital positions, risk management and governance strengthen its res