##piah suddenly blew up the rupiah value of banks ’ liabilities denominated in foreign currencies and put the banks with short position is serious problems ; ½ the economic crisis put banks ’ customers ( debtors ) in problems which depressed the value of banks ’ assets ; and ½ the tight monetary policy to stabilize the exchange rates, and the resulting high interest rates resulted in negative spreads for the banks. those effects further resulted in many other negative impact on the banks as well as on the economy at large, such as the unwillingness of banks overseas to accept l / c issued by indonesian banks, credit crunch resulted from the low capital base, etc. and such declining trend in the banking sector reinforced the trend in the real sector, and vise versa. 4. efforts to remedy the crisis of confidence on banks : long term ; undoubtedly, this would have to be dealt with by adopting some measures to improve the confidence, both from within the country and from offshore. and, the comprehensive policy package covering economic and non - economic areas was designed for that purpose. however, the recovery of confidence cannot be obtained overnight. it takes time and continues efforts. in the meantime, the economy would have to bear the cost., among other things the high interest rates and / or instability in exchange rates. in this regards, in the short run, we do have a choice, i. e. either to aim at a stronger and more stable exchange rate while bearing the cost of higher interest rate, or aiming at lower interest rate while bearing the cost of weak and unstable exchange rate. short - term ( emergency ) : the government provides guarantees to all depositors and creditors of locally incorporated banks. this is designed to stabilize the situation so that an orderly work - out of the banking system problems can be carried out. this measure enables banks suffering form lack of liquidity due to massive withdrawals to get liquidity support form the central bank as the lender of the last resort. 5. on the low ( mostly negative ) capital base. quite logically, something has to be done. the banks would not be able to do much, to say the least, without anything being done to help recover their capital base. therefore a re - capitalization program has been introduced, whereby the government is willing to subscribe to up to 80 percent of the additional capital needs of viable bank. this is likely be a very expensive exercise, although in a longer run there is a chance that the money invested

call for divesting from carbon - intensive activities or from geographical regions vulnerable to physical risk. rather, we are asking banks to fully grasp the physical and transition risks and to actively start managing them, with the aim of making their portfolios more resilient to c & e risks. not all sectors will decarbonise overnight. for example, the international energy agency ( iea ) scenarios show that certain sectors will continue to rely on carbon - intensive technologies for some time. we as prudential supervisors merely need banks to understand what the transition entails for their risk exposures to those sectors, and to reflect it in their overall risk management strategy. what we do not expect is an outright withdrawal from carbon - intensive industries, nor do we expect it to happen for every single sector or counterparty – but we do expect banks to harbour the capacity to manage the risks emerging from climate change. to draw a comparison with traditional risk exposures, we, as supervisors, would of course not expect banks to divest from all assets that entail credit risks, but we do insist that these risks are managed appropriately. c & e risks are to be managed just like any other risk ; and their sound management requires sound risk controls. this is precisely one of our focus areas in the upcoming thematic review on c & e risks. supervisory roadmap for c & e risks for several years, the ecb has identified banks ’ exposure to c & e risks as one of the main vulnerabilities in the european banking sector. assessing and helping banks address risks stemming from climate change and environmental degradation will be one of our supervisory priorities from now until 2024, albeit these risks have been on our minds for far longer. i remember giving my first speeches on this topic in late 2015 when still an executive board member of de nederlandsche bank. so, we have already come a long way and our supervision of c & e risks will now take more concrete form. the 2022 srep cycle will be marked by several key initiatives, which represent the next level of maturity for our supervision of c & e risks. the first of these initiatives was the climate risk stress test, launched in january and currently being conducted by a dedicated supervisory team. this stress test was designed, first and foremost, as a learning exercise – for supervisors, for banks, and for the financial industry as whole. we are adamant about the importance of raising awareness of c & e risks. and this stress test constitutes an