this space, supported by consistently communicated, well - defined objectives and related evidence base, are necessary conditions for their acceptance and effectiveness. at present national macroprudential authorities play the central role implementing borrower based measures. the esrb however has an important coordinating role via the notification process. national authorities also benefit in their deliberations from interactions with the ecb. the ecb also has an important ‘ top - up ’ power with regard to capital - based instruments like the ccyb and o - sii buffers. the impact of borrower based measures when they are binding is much more evident to the public at large than capital and liquidity restrictions imposed directly on banks. borrower - based measures can have important distributional and welfare effects in society, particularly in relation to access to home ownership. these factors underline the importance of getting the design of the measures right, taking into consideration country - specific factors, and also the need to communicate the overall framework and ensure it becomes generally acceptable in society as a permanent feature of the mortgage market. as well as the wide range of national - specific institutional features which influence the design and calibration of such instruments, this suggests that responsible authorities must be accountable at national level. although, we should be humble enough to acknowledge that the interactions between macroprudential policy measures may not be fully or correctly identified ex ante. significant progress has been made in the analytical toolkit to support macroprudential policy across the euro area, as was outlined in some of the presentations yesterday. as policy - makers 4 / 5 bis central bankers'speeches we should continue to draw on this input, encourage its further development, and understand where judgement in evaluating policies impact, effectiveness and interactions is necessary. in this regard, particularly as we are still in the early stages of an active macroprudential policy framework in europe, we should aim to avoid underlaps to ensure systemic risk is mitigated. as the framework in the eu develops, national designated authorities should continue to have a sufficiently broad set of tools to target identified systemic risks. we should continue to learn by doing. combined with a commitment to regularly, rigorously and transparently review policy measures, we will ensure the most effective tools are in operation, both in isolation and jointly, to mitigate systemic risk. * * * conclusion today, i have touched on a number of challenges that we have before us when considering the appropriate macroprudential policy framework for europe. as

##sap bank stress test. the fsap adverse scenario was not predictive but designed to assess the capacity of irish banks to withstand a severe but plausible scenario of a simultaneous downturn in the irish and uk economies, characterised by a fall in property prices and a widening of sovereign spreads that triggers increased funding costs for banks. the exercise confirmed that the risks within the bis central bankers ’ speeches banking sector are manageable at a system - wide level. unsurprisingly, it also highlighted that some vulnerabilities still exist as a consequence of the recent crisis. the eba stress test serves as a useful barometer to assess the health of the european banking sector and focuses on the largest banks operating in the european union. relative to other member countries, the irish banking system has experienced higher loan loss rates since 2008. since projected credit losses in the adverse scenario are calculated based on past experience, the capital depletion in the adverse scenario is inevitably more pronounced for irish institutions. stronger starting capital positions coupled with ongoing balance sheet repair has enabled european banks, including the irish banks, to withstand a more severe scenario than in the 2014 stress test exercise. as with the fsap stress test results, the primary message from the exercise is that the irish banks included in the eba sample ( aib and bank of ireland ) are adequately capitalised but remain vulnerable to a downturn, especially in relation to the continued workout of problem loans and the sustainability under stress of current profitability levels. the fsap, eba and ssm stress test results, together with additional supervisory stress testing work, are being combined with the full risk assessment for all in - scope banks to feed into the annual supervisory review and evaluation process ( srep ), which is used to determine capital requirements and capital guidance for banks. in addition, the stress tests and srep inform the risk mitigation programmes, which are focused on driving the banks to continue to reduce their risk profiles. as the ecb is now the competent authority for the supervision of irish banks, the focus of our joint work includes ensuring that banks make further progress in the workout of problem loans, have credible business strategies and risk management plans to increase resilience to deterioration in their operating environment, including any adverse consequences of brexit. brexit the short - and medium - term macroeconomic effects on ireland of brexit depend on several factors. most directly, a slowdown in uk output growth and a depreciation