. this, in turn, can complicate the communication of data dependence : how can we adopt and convey a clear strategic stance on policy while maintaining our credibility if evolution of the data requires an evolution of that strategy? i prefer a framework where we make it clear that we are focused on broad trends - - elsewhere i have used the aviation analogy that we should not " chase the needles " on the instrument panel. we should be clear that, while we will respond to clear and durable evolution in these broad trends, we are not reacting to every piece of volatile data. 4 2 / 6 bis central bankers'speeches the countercyclical capital buffer and financial stability let me now shift gears and return to the ccyb, beginning with how it fits within our broad set of efforts to promote financial stability. the core of that approach has been to establish a set of structural, through - the - cycle regulatory and supervisory standards to ensure resilience against a broad range of shocks. in contrast to the pre - crisis framework, banks, especially the largest and most systemic banks, are now required to maintain substantially higher and higher - quality lossabsorbing capital and other cushions ; stress testing examines the resilience of large banks to severely adverse economic conditions ; liquidity requirements and regulatory incentives to limit reliance on short - term wholesale funding have reduced funding risk among large banks and their affiliated broker - dealers ; and resolution planning requirements reduce the risks that the failure of a large firm would spill into the broader economy. outside of the banking system, money market mutual fund reform has reduced this sector's susceptibility to destabilizing runs by investors, and requirements that many derivatives be centrally cleared have decreased the opacity and interconnectedness that contributed to the chaos of 2008. in addition to these through - the - cycle measures, the federal reserve actively monitors for the buildup of financial stability vulnerabilities and can require large banks to increase their lossabsorbing capacity through increases in the ccyb when systemic vulnerabilities are sufficiently large. while such countercyclical tools are new, their goal is to mitigate the buildup of vulnerabilities during buoyant periods, since experience has proven time and again that vulnerabilities can build during good times as risk appetite grows and memories of earlier instability fade. effectively mitigating the buildup of risk through the ccyb requires a systematic framework for analyzing vulnerabilities and a mapping

being said, we have not found much evidence pointing to credit supply or the operation of the measures themselves as being a key driver of broader mortgage and housing market activity through 2020. while there was tightening in credit criteria earlier in the year, consistent with a more conservative risk appetite on behalf of lenders, the impact of the health restrictions on activity in the market appears to have been more 2 / 4 bis central bankers'speeches of a key driver in overall mortgage credit developments. taking a longer perspective, it is clear the mortgage measures have meant we were in a better position going into the covid - 19 shock than the previous financial crisis. the benefits of the measures are most evident in times of stress. we can see from our analysis of the initial payment break data that borrowers with mortgages issued at lower loan - to - income values were less likely to be in financial distress. we examined whether a temporary loosening of the mortgage measures might be appropriate to guard against any potential tightening in credit supply by lenders. however, the effectiveness of any such action hinges on the drivers of tighter credit supply. as the measures only provide a floor to underwriting standards any loosening would be unlikely to be effective in offsetting tightening decisions by lenders which predominantly reflect changes in their own risk appetite. more broadly, given the underlying demand - supply imbalance in the current housing market, additional debt would likely lead to greater pressure on house prices and potentially exacerbate affordability issues in areas of high housing demand, with associated adverse implications for bank and borrower resilience. as a community, we continue to grapple with fundamental challenges of sustainability, affordability and delivery of appropriate housing supply to meet the needs of home - owners and renters across the private and social domains. the mortgage measures help by ensuring unsustainable lending practices do not exacerbate these challenges. we want the measures to continue to enable sustainable mortgage lending in the irish housing market. as both irish and international experience has shown, a fully functioning and sustainable housing market is not achieved by excessive leverage in the household sector and imprudent lending standards by banks. at this event last year, i outlined a three - pillar approach for developing our macroprudential framework to bolster resilience covering banks, borrowers and the area of markets - based finance. our response to covid - 19 has necessarily focused attention in 2020 on ensuring the financial system uses the resilience built - up in recent years to