vitas vasiliauskas : investment and investment finance - lithuania welcome speech by mr vitas vasiliauskas, chairman of the board of the bank of lithuania, at the joint bank of lithuania and european investment bank webinar on investment and investment finance, 11 february 2021. * * * good morning, dear marco1, dear thomas2 colleagues, presenters and viewers, a warm welcome to this joint webinar organised by the bank of lithuania and the european investment bank ( eib ). allow me, first of all, to thank the eib for approaching us with the idea to hold this event. this is indeed a pivotal time to talk about investment. investment decisions that we make now will be crucial in both the short and the long run. let us begin with the short - term implications. according to the organisation for economic cooperation and development ( oecd ), gross fixed capital formation in the euro area fell by almost 11 % last year. this is a stark contrast to the us, where this decrease did not amount to even 2 %. in 2021, investment in the us will remain stronger as well. accordingly, gdp in the euro area is now projected to recover to the pre - pandemic level only towards the end of 2022. the us, meanwhile, is likely to make up for the lost ground already this year, whereas china ’ s output has not only fully bounced back – it has already returned to its prepandemic trend. europe should not be satisfied with such outlook. the euro area needs a stronger investment push to speed up our recovery and catch up with the other large economies. otherwise, painful long - term scarring effects will become unavoidable. public investment is key in this regard – especially in the current low - rate environment, characterised by historically low sovereign debt servicing costs as a share of fiscal revenue. as for the private sector, various surveys and reports show that uncertainty now stands as the largest barrier for private corporate investment. our estimations show that even in lithuania, despite its strong economic resilience displayed so far, private sector investment is likely to have fallen by almost 8 % in 2020. however, policy makers can address this issue. current research suggests that when firms grow risk - averse due to uncertainty clouding the future, public investment becomes much more effective than usual. not only does it have a higher multiplier, but it actually crowds - in private investment, rather than crowding it out

multiple areas. importantly, this includes assessing whether existing tools can be repurposed by embedding the macro - prudential perspective, which would likely lead to raising the baseline of existing requirements. second, we should focus on enhancing capabilities in the area of data availability, governance and analytical tools to adequately gauge systemic risk. in addition to a solid micro - prudential foundation, this is the key to any macro - prudential approach. it is hard to front - load macro - prudential policy in the fog. third, we should assess the need for additional macro - prudential tools, including in the hands of authorities, to address any remaining risks that are not mitigated by embedding the macro - prudential perspective in existing regulation. the approach for crypto - assets is fairly similar, in that the focus should be on building micro - prudential regulation first and making sure it is globally consistent to avoid arbitrage. we also need to close data gaps and improve our understanding of systemic risk in this sector, including the potential for spillovers to banks and more traditional asset classes. in the case of climate, the existing banking macro - prudential toolkit already provides a starting point, but needs fine - tuning to better capture climate - related risks and prevent them from building up, to build resilience in case these risks materialise, or both. let me stop here. 4 / 4 bis - central bankers'speeches