of basel ii – in a situation where there is increasing pressure on asset quality. while the macro economic situation would certainly have an impact on npas, this can still be contained by substantially upgrading the credit management systems so as to be able to contain slippages and improve recovery. overall, improvement in risk management systems, upgradation of technological platforms and building up of specialized skills in the banking system are the challenges which will distinguish the more successful ones from the others. it is important and this is a lesson from the recent crisis that the competitive pressures are not “ central banking in a balance sheet recession ”, panel remarks by mr jaime caruana, general manager of the bis, at the board of governors of the federal reserve system 2012 conference on " central banking : before, during and after the crisis ", washington, 23 – 24 march 2012. bis central bankers ’ speeches allowed to override basic prudence. i am sure that our banking system will rise above the formidable challenges and emerge stronger and more efficient. i wish the conference all success. thank you. bis central bankers ’ speeches

by the pillar 2 guidance and the capital conservation buffer, to operate below the liquidity coverage ratio and to partially use capital instruments that do not qualify as common equity tier 1 capital to meet the pillar 2 requirements ; • easing of collateral requirements in obtaining funding from central banks ; • introduction of tltro iii to provide banks with very cheap funding at an interest cost of up to minus 1 % if such funds are lent to businesses ; • provide liquidity through a €750 billion pandemic emergency purchase programme ; • further flexibility in prudential treatment of loans backed by public support measures, thus allowing banks to avoid procyclical effects when applying ifrs 9. • the lowering of the countercyclical buffer requirement to zero in a number of countries. • requesting banks to suspend shareholder distribution of dividends for the 2019 financial year as well as for fiscal year 2020, at least until october, to enable banks rebuild capital buffers. all such regulatory measures have been implemented not only to encourage banks in their ongoing support to the economy but also to ensure the stability of the banking sector going forward. with these measures, one needs to take into consideration the fiscal support through a broad range of page | 4 document classification : public government measures aimed at helping households and businesses, which also indirectly sustain the banks by mitigating the effects of the crisis on bank balance sheets. the negative implications from the pandemic will continue to be felt in the near term and this is why the central bank encourages all financial institutions to preserve capital, while at the same time continue to lend prudently and avoid unnecessary forbearance measures. i will repeat : the banks are sufficiently liquid, with strong capital ratios and financial resources, and these, coupled with their technological infrastructure and human resources, is enabling them to meet the challenges that the pandemic presents. to conclude, although the pandemic has been around with us for some nine months, the uncertainties surrounding it are still high, although recent news of the rollout of a vaccine in the very near future have surely given hope that we are closer to the end of the pandemic. nevertheless, its effects will not go away any time soon, and 2021 will be a challenging year, both from an economic perspective and for the banking sector. therefore, both fiscal and monetary authorities will need to remain vigilant and monitor closely the situation to avoid untimely withdrawal of support measures. finally allow me a footnote. i would