years to address the weaknesses in structural, regulatory and supervisory arrangements that existed prior to the crisis. the fssa recognises the significant strengthening of irish financial system, the major structural changes that have taken place since the financial crisis and the implementation of a more proactive regulatory approach, concluding that “ the authorities have been effective and vigorous in strengthening prudential regulation and supervision, implementing the lessons of the crisis, and keeping up with developments in european and international good practice. ” in relation to the supervision of securities markets, the fssa also acknowledges the bank ’ s leading role in the analysis of collective investment activities, which is significant in view of the large scale and international interconnectedness of the irish investment funds sector. at the same time, the imf has also made a number of important recommendations to increase further the resilience of the irish financial sector and improve the effectiveness of the bank as a regulator. the bank has already started to work on these recommendations, in conjunction with other irish and european authorities. to take one example, the bank has recently formed a new internal advisory committee on the design of domestic macroprudential policy measures, including the borrower - based mortgage rules, the counter - cyclical capital buffer and the other systemically important significant institution ( osii ) buffer. in line with the imf ’ s recommendation to improve further the degree of public transparency in relation to our decision - making processes and our own ongoing commitment to provide evidence - based explanations for our policy measures, summary records of the meetings of this new macroprudential measures committee ( mmc ) will be published. stress tests an important element of the fsap was a stress test exercise for the banking system. the forward - looking assessment of the resilience of banks to various risk scenarios is a key tool in informing supervisory actions and financial stability policies. in fact, the bank has recently participated in three stress testing exercises : first, as part of the imf fsap ; second, as part of the wider bank stress tests across the european union, led by the european banking authority ( eba ) ; and third, the single supervisory mechanism ( ssm ) stress tests, which followed the eba methodology and ran concurrently with it. the bank also continues to review and challenge the banks ’ own stress testing approaches and outcomes. i will focus on the first two exercises, as the outcomes are now in the public domain. the bank ’ s analytical framework was used to support the imf f

states. as a small economy, our engagement at these fora is especially important so that policies can help all member states overcome the crisis. the recent agreement on the next generation eu fund, which should help support all countries in their recovery from the current crisis, was also a considerable milestone. the agreement provides a common budgetary instrument to complement national fiscal policies. while the fund is currently temporary, it should provide useful lessons for how a shared fiscal capacity can be used for macroeconomic stabilisation. on the monetary policy front, the governing council of the ecb responded rapidly with sizeable measures, including a pandemic emergency purchase programme ( pepp ) and the pandemic emergency longer - term refinancing operations ( peltros ). the envelope for pepp alone is €1, 350bn worth of assets, or approximately 11 per cent of euro area gross domestic product ( gdp ) [ which can be purchased on the secondary market under this programme, until the end of june 2021 ]. furthermore, additional monetary policy accommodation was provided through an increase in the existing asset purchase programme. the goal of all these measures is to support the flow of credit to the real economy, prevent a damaging tightening of financing conditions and proactively respond to the worsening outlook for growth and inflation in the euro area. furthermore, monetary policy has learned lessons from the euro crisis. philip lane, member of the executive board and former governor of the central bank, highlighted in a recent blog post that the flexibility embedded in the pepp has reduced the risk of fragmentation, a key issue in the euro crisis, by frontloading asset purchases and targeting them to where they are most warranted. 7 these significant actions of governments and of central banks – have been critical in stabilising our economies. these counter cyclical policies, domestic and international, fiscal and monetary are positively reinforcing each other across borders and supporting the recovery. they are examples of the european project delivering a better outcome for all. initial estimates suggest that for ireland, compared to a scenario without policy action, these measures would reduce the scale of the decline in output in 2020 by just over four percentage points. 8 there have been, and always will be, economic downturns but deeper integration with the common aim of minimising hardship for households and firms should lead to better outcomes for the people of europe. and our engagement in europe is central to delivering this for the people of ireland. financial stability – a shared concern now let