claudia buch : hearing of the committee on economic and monetary affairs of the european parliament introductory statement by prof claudia buch, chair of the supervisory board of the european central bank, at the hearing of the committee on economic and monetary affairs of the european parliament, brussels, 18 november 2024. * * * thank you very much for the invitation to this exchange with you, the members of the european parliament's committee on economic and monetary affairs. today, i would like to provide an update on the european banking sector's resilience and potential vulnerabilities, our supervisory efforts to ensure that the sector remains resilient, and the legislative foundations required to further strengthen our ability to respond to future challenges. risk outlook european banks are operating in a macroeconomic environment characterised by a moderate growth outlook, subject to considerable uncertainty. the gradual recovery in economic activity and expectations of further monetary policy easing have led to benign risk pricing in financial markets, which could result in sudden shifts in market sentiment. protectionist tendencies could disrupt the global supply chains that are essential to european industries, with a negative impact on firms'growth potential, competitiveness and financial resilience. these cyclical developments are further amplified by longlasting structural challenges, such as an ageing population, low productivity, and weak innovation dynamics. the european banking sector is well capitalised. strong capital positions allow banks to provide funding to the real economy. while lending growth has slowed down since mid2022, the volume of loans available to households and firms did not, overall, contract. banks tightened credit standards, reflecting their perception of heightened risk and lower risk tolerance. lending dynamics were also affected by the negative impact of higher interest rates, weak investment, and worsening consumer confidence on loan demand. 1 banks'resilience in terms of capital and liquidity buffers, including during periods of stress in recent years, is due to several factors. better regulation and supervision have certainly played an important role, as better capitalized banks tend to show more stable lending patterns also during crises. in addition, banks have benefited indirectly from policy measures taken in response to exogenous shocks. loan losses have remained muted. looking ahead, however, public policy may be more constrained in buffering shocks, potentially putting larger demands on the financial sector's own resilience. in an environment of heightened geopolitical risks, the likelihood of tail events materialising has risen. adverse events are difficult for banks and markets to predict or

is our social security and pension fund scheme. we refocused the cpf on its core objective of providing for the basic needs of the majority of singaporeans, in terms of retirement needs, healthcare expenses and home ownership. we are tightening the use of cpf for buying properties, so as to leave more for retirement needs. we are reducing the coverage for high - income singaporeans, who should be able to plan and provide for their own retirement. we are lowering contribution rates for older workers, who are most vulnerable to losing their jobs. these measures will make our labour market more flexible, and contribute to our economy ’ s overall resilience and competitiveness. second, we want to encourage entrepreneurship in order to develop more local and foreign start - ups and emerging enterprises to complement our strong base of mncs and established local companies. in this rapidly changing, unpredictable environment, the best way to spot and exploit new opportunities is not by centralised direction, but through the drive and entrepreneurship of our people. according to the 2001 global entrepreneurship monitor report, singapore ranked 27th out of 29 countries in terms of entrepreneurial activity. we need to do better. we need to imbue our young with entrepreneurial instincts and attitudes, through their school education and life experiences. at the same time, the government should cut red tape, create more economic space for private enterprise, nurture high - potential local enterprises and develop a culture tolerant of risk - taking, experimentation and honest failure. a self - renewing, self - sustaining entrepreneurial culture will not emerge overnight, but we are making some headway. ten singapore companies made it to this year ’ s list of forbes ’ global 200 companies with revenues under us $ 1 billion. this ranks among the largest number of companies for any country. a third area of focus is the development of our human capital, both local and foreign. singaporeans rank highly in technical skills, and our students often top international mathematics and science competitions. but we need to improve our soft skills, such as people skills, management skills, communications skills, as well as cultural and artistic skills. we will also continue to welcome foreign talent to work, live and play here, to add to our talent pool. fourth, we need to identify, nurture and promote new areas of growth in both manufacturing and services, the two complementary engines of our economy. the continuing emergence of lower - cost locations spurs us to constantly review and refresh our manufacturing value proposition, be it in refining