interesting speeches on various aspects of this challenging topic in our conference programme for this afternoon, which deal with interaction and repercussion effects between financial reporting, financial regulation and financial stability. given that accounting data are used as the basis for financial reporting, regulatory reporting, and for market and financial stability analysis, you may hear some interesting views on, for example certain accounting approaches, and with regard to the extent of disclosures and transparency. turning to the third part of our conference that will deal with central bank balance sheets during the crisis, the financial crisis required unconventional monetary policy tools and liquidity support that had a considerable impact on the size of many central banks ’ balance sheets, influenced their risk profile and left marks on their financial buffers and profit and loss accounts. the eurosystem reacted to the financial crisis by increasing its intermediation in bank funding markets via an increased range of monetary policy instruments. consequently the eurosystem risk profile partially shifted and increased, from fx rate and gold price risk to credit risk related to domestic assets. any related counterparty default risk is however mitigated by adequate underlying collateral which provides an additional guarantee. the operational framework was adapted accordingly – examples thereof are the extension of credit maturities, outright purchase programmes for securities and changes to the collateral framework. similar developments were experienced by many central banks around the world. in the case of the eurosystem, the balance sheet expansion was largely due to an increase in the size and maturity of temporary lending operations under the fixed rate full - allotment tender procedures. the eurosystem had increased its lending to banks after tensions in the money market emerged in august 2007, but the increase in its balance sheet size remained relatively limited until september 2008 ; it became significant only after the collapse of lehman brothers. as of mid - 2012, excess liquidity and, concomitantly, the size of the eurosystem balance sheet have started to decline again. on 23 may 2014, monetary policyrelated lending to euro area credit institutions stood at eur 640 billion, which is roughly half as much as at the peak in 2012. other major central banks have conducted mainly largescale outright asset purchases. in the aftermath of the financial crisis, the eurosystem ’ s risk control frameworks were developed further and refined. the eurosystem ensures that it is protected in financial terms, inter alia, through the implementation of prudent risk management and accounting frameworks, and through a cautious allocation of its invested

just as cautious as we would expect banks to be. and we must remember that these technological advances are no substitute for supervisory judgement, which will still play an important role in the supervisory approach, supporting the outcome of supervisory assessments and underpinning the use of discretion in supervisory actions. 4 / 5 bis central bankers'speeches conclusion ladies and gentlemen, i have touched on two major structural changes. now it is time to come to a conclusion. as i said at the beginning, the job of a supervisor is to be slightly less optimistic than the average person. we have to make sure that banks are ready for anything, even for a bad outcome. so we will continue to push banks to prepare for brexit and any other challenges we see coming their way. and although we might be less optimistic and more cautious than others, we do not shy away from innovation. against the backdrop of brexit, we have put forward many ideas on how to improve the european supervisory framework. and we see technology as an opportunity to make supervision more efficient and effective. the world is changing constantly, and we all have to adapt – banks as well as supervisors. 1 weinstein, n. d. ( 1980 ), unrealistic optimism about future life events, journal of personality and social psychology, 39 ( 5 ), pp. 806 – 820 ; sharot, t., riccardi, a. m., raio, c. m. and phelps, e. a. ( 2007 ), “ neural mechanisms mediating optimism bias ”, nature, 450 ( 7166 ), pp. 102 – 105. 2 broeders, d. and prenio, j. ( 2018 ), “ innovative technology in financial supervision ( suptech ) – the experience of early users ”, fsi insights on policy implementation, no 9. 3 ibid. 5 / 5 bis central bankers'speeches