evening i want to set out what is being done. at the heart of it is the need to ensure finance supports you through the whole cycle. the need to avoid the pattern – all too familiar to you – of financing conditions going from conservative to careless and then to completely closed, all too rapidly. bis central bankers ’ speeches the need to replace financing that magnifies cycles of sentiment with financing that mutes them. and in this, the measures i ’ ll outline this evening constitute one aspect of a broader post - crisis endeavour to build, and maintain, a financial system that supports, and does not disrupt, the real economy. it goes by the name of macroprudential policy. banking system resilience the first step to nurturing a resilient environment is to reduce the prospect of a sudden crunching of credit supply from an injured banking system. in the financial crisis, as banks were holed below the waterline and new lending seized up, the flow of new lending to commercial property collapsed to a third of its earlier level. since the crisis, the bank of england has been building a safer banking system. measured on a consistent basis, major banks hold 10 times more capital than they did before the financial crisis1. and through stress testing, we ’ re making sure they ’ re able to withstand severe stresses. by withstand, i don ’ t just mean survive. i mean continue to lend, including to you. last year, we tested whether the banking system could withstand a snap back of long - term interest rates, a sharp fall in residential and commercial real estate prices, and a deep recession – all without cutting lending. this year we ’ re testing whether they can withstand a synchronised, sharp slowdown in china, emerging markets and europe, and sharp falls in asset and commodity prices – all while increasing lending to the uk real economy by 10 %. we showed last year that, where the tests say a bank needs more capital, we ’ re prepared to take action. and where the system needs strengthening as a whole, we can change capital requirements to put additional resilience in, either across the board through countercyclical requirements, or to particular sectors, through sectoral capital requirements. we are matching the strength of the banking system to the scale of risk it faces, so you can be more confident that credit will be there when you need it. resilient underwriting standards we have to nurture more than the resilience of

claudia buch : the deutsche bundesbank's 2016 financial stability review speech by prof claudia buch, deputy president of the deutsche bundesbank, at the press conference to unveil the deutsche bundesbank's financial stability review, frankfurt am main, 15 november 2016. * * * ladies and gentlemen i would like to welcome you, on my behalf and on behalf of andreas dombret, to the unveiling of the 11th edition of the deutsche bundesbank ’ s financial stability review. the stability of the financial system has been the topic of much discussion over the past year. interest rates, which have remained low for years, are currently in the focus of the debate. these low interest rates reflect weak global economic growth. at the same time, they are encouraging increased risk - taking and an expansion of borrowing. it is impossible to pinpoint exactly when interest rates will go back up again. market players are capable of getting it wrong when it comes to assessing risks and future economic growth. to illustrate the point, let ’ s compare this with election forecasts. most forecasts got the outcome of the us presidential election wrong : only 11 out of 96 forecasts predicted the election outcome correctly. 1 the election forecasts took into account average “ standard ” forecast errors from the past. however, these errors were exceeded by a considerable margin in the actual election. this is not actually anything to worry about if isolated errors ( eg in individual us states ) cancel each other out. however, if all the individual forecasts are systematically biased in the same direction, they won ’ t cancel each other out. and if all observers rely on forecasts, this can lead to false certainties. at this moment, if we look at the financial markets, we see a danger of market participants holding false certainties – and thus, expecting interest rates to stay low, and asset prices to stay high, over the long term, taking excessive risks. on the whole, risks could be systematically underestimated, and the value of collateral for lending operations could be overstated. the surprise that sets in when the opposite occurs is all the greater. in the financial markets, surprise news leads to abrupt price corrections – as was shown by the markets ’ response to the brexit vote. market interest rates can jump up, leading to a significant need for adjustment with the potential for adverse consequences for the real economy. financial stability considerations therefore warrant the build - up of risk buffers so