institutions in different countries including nonmembers of the committee. i welcome this approach. we should try to learn from each other and turn the differences between our financial sectors and the different perspectives resulting from them into an asset. the financial stability institute has already carried out an insightful cross - country comparison on proportionality in banking regulation. i am sure that stefan hohl will tell you more about it in a few minutes. let me just say that i highly value this work of the fsi, and that i would appreciate to see more such work on proportionality from the fsi or the basel committee in the near future. now i am looking forward to your questions, and to learning from your perspectives on proportionality. thank you for your attention. 5 / 5 bis central bankers'speeches

in financial markets has certainly worsened : financial conditions are tightening, risk aversion has increased, and uncertainty is high. risks, particularly in commodity markets and related to cyber security, require close monitoring. geopolitical events, climate change, and digitalisation are intensifying the ongoing structural change in the real economy. an abrupt process of structural change may lead to losses in the real economy and write - downs of loans. structural change also places a burden on the financial sector, which has to accompany the real economy through the transition. what buffers against unexpected losses are available in the system? during the pandemic, significant fiscal and monetary support has played an important role in protecting the balance sheets of financial institutions. however, fiscal space is more limited than it was prior to the outbreak of the covid - 19 pandemic, given the increase in public debt that we have seen over the past years. in addition, monetary policy needs to address higher inflation and is in a process of normalisation. higher inflation puts pressure on central banks to raise interest rates to keep inflation expectations anchored. appropriate buffers thus need to be available within the financial system. this requires effective stress testing and a strong capital base – including by building up micro - and macroprudential buffers. additionally, to enhance the feasibility and credibility of resolution, the corresponding reforms should be implemented in full. 10 it is crucial that financial institutions with unviable business models can exit the market without jeopardising financial stability. closing the remaining gaps would help to fully reap the benefits of the resolution reforms. 3 / 4 bis central bankers'speeches overall, only a resilient, well - capitalised financial system can perform its functions and benefit the real economy and society alike. as we face a period of high uncertainty and accelerated structural change, this is more important than ever. 11 1 1. i would like to thank philip jamaldeen, michael richter, edgar vogel and matthias weiss for their most helpful contributions and comments on an earlier version of this text. all remaining errors are my own. 2 2. for all data related to the german real estate and household sectors see www. bundesbank. de / en / statistics / sets - of - indicators / system - of - indicators - for - the - german - residential - propertymarket / system - of - indicators - for - the - german - residential - property - market - 795268. for euro area house prices see sdw