” essentially means is “ enabling productive investments through insurance against adverse events ”. assume two owner - run firms that have fully financed their firms through equity capital. in good times, the owners enjoy the full gains from their activities. these gains accrue to individual owners but also to the economy as such through a greater variety and better quality of products and services, growth and innovation. in bad times, however, owners that have invested their wealth in their individual firms have to bear the full losses. if they do not have any other means of income, their consumption will thus fluctuate with the firm ’ s profits. owners thus have two options. they can save some of their income in good times, invest in bank deposits, and draw down deposits in bad times. the bank can then extend credits to other firms. alternatively, the firms ’ owners can hold equity in their neighbour ’ s firm. if the profits of the two firms are not perfectly synchronised ( or “ correlated ” ), they will “ share risks ” : if one firm is doing well, the other one is not, and vice versa. both owners can stabilise their income and consumption and thus insure against the perils of fluctuating profits. without this insurance mechanism, they may not have started their enterprise in the first place – thus foregoing economic benefits. of course, going from this simple example to an intuitive communication of the benefits of crossborder risk sharing in modern market economies is not trivial. nevertheless, i think we need these simple examples to explain why “ risk sharing ” can be economically beneficial. take the example of the development of pan - european savings and pension products, one core objective of the cmu. well - functioning pensions systems can indeed provide savings instruments and insurance services for the individual. in order to reap these benefits, individual market participants must have a basic understanding of relevant financial concepts, and appropriate regulations must be in place to prevent the build - up of risks for the individual household or even the financial system. financial literacy is the key to informed decision making at the individual level. it is an individual skill, related to the capability of individuals to deal with financial concepts, to take sound financial decisions, and to balance the risks and returns of these decisions. lusardi and mitchell ( 2011a, 2011b ) developed three questions measuring fundamentals necessary for financial decision making related to interest rates, inflation and the benefits of investment diversification. these questions have been widely used

certain economies. this has been an important area of work for the fsb. in 2022, we published a report looking at trends in the structure of emes'external borrowing, focusing on the shift towards non - bank financing. the report examined how these developments contributed to the build - up of vulnerabilities in emes and to the march 2020 turmoil. it discussed policy issues that could be considered when thinking about measures to limit these vulnerabilities. this included measures to tackle the build - up of foreign exchange mismatches ; enhance crisis management tools ; and address data gaps to facilitate risk monitoring and the timely adoption of policies. the fsb also stressed the importance of ongoing work to address vulnerabilities from liquidity mismatches in open - ended funds, which would also help bolster the resilience of emes'financial systems. i am therefore happy to report that the fsb is finalising its policy recommendations to address structural vulnerabilities from liquidity mismatch in open - ended funds, working in close coordination with iosco. 2 / 3 bis - central bankers'speeches enhancing the resilience of the nbfi remains a key priority for the fsb in 2024. the fsb will also continue to build on the lessons from the march 2023 turmoil and to monitor macro - financial vulnerabilities in a higher interest rate environment. let me conclude. vulnerabilities in the global financial system remain elevated. tightening financial conditions and high levels of debt create challenges for both bank and non - bank lenders. in tackling the challenges ahead, formulating policy responses and building resilience, it is essential that there is global coordination and that we pay attention to potential cross - border spill - overs. gatherings like today's forum are an important way of exchanging views and identifying the different ways in which governments and international organisations can work to enhance the resilience of our global financial system. as i mentioned earlier, regional perspectives matter a great deal, and amro's financial stability report is therefore a welcome contribution to the global dialogue on vulnerabilities. for our part, the fsb will remain focused on building resilience, so that the financial system can continue to play its part in building strong, sustainable, inclusive, and balanced growth. thank you. 3 / 3 bis - central bankers'speeches