out of three, but not all three at the same time. you cannot use national policies to regulate global systemic banks without forcing them to divide capital, and without authorities to divide regulation and supervision between home and host countries. 1 / 4 bis - central bankers'speeches a scenario that counteracts the benefits of financial integration, such as the greater risk diversification and more efficient capital allocation, that can be achieved by those global systemic banks. benefits that are important for a small, open economy like ireland. and the netherlands. because that is another thing the celtic tiger and the dutch lion have in common : we are both small, open economies, with a relatively large financial sector, and that makes us both strong and vulnerable. for both our countries, openness is the only way to prosperity – as governor whitaker would probably remind us – so the only choice we have is accept the cost of being vulnerable to external shocks. or more aptly, as whitaker wrote in economic development, " the readiness to adapt to changing conditions ". as tigers and lions together, we know that we must be prepared to handle a'cat's day'every day. as central bankers and supervisors, we are responsible for financial stability. and the main financial stability risks we face at the moment are global risks. that means that even if there is'dew on the grass ', we always have to be on the lookout for the'cliffs and towers in the sky '. those cliffs and towers do not only take on the shape of traditional risks like inflation, tightened financing conditions, and risks of asset price corrections, but can also take on new, emerging shapes, like the systemic risks posed by nbfis. this is why the financial stability board is undertaking significant work on nbfis. this is why i admire the role of the central bank of ireland as a frontrunner in macroprudential policy for the nbfi sector, as you first introduced a leverage limit for irish property funds to address the risks stemming from excessive leverage and liquidity mismatch. some of the cliffs and towers we face have old shapes, shapes we should know and recognise. the turbulence in mortgage backed securities markets confirms that banks tend to neglect risk when interest rates are low for so long. the failure of silicon valley bank shows us that parts of our financial system are still vulnerable to bank runs, despite the worldwide introduction of deposit guarantee schemes. the failure of credit suisse due to scandals and bad management confirms that trust must

be earned. both of these events underline that trust is the most important asset that banks can have, the most important weight for balancing financial stability. confidence and trust are the foundations of any well - functioning financial system, and we all know, or should know, that trust takes years to build, seconds to break and forever to fix. 2 / 4 bis - central bankers'speeches to maintain financial stability we do not only have to adapt to changing conditions, we also have to create the conditions to be able to adapt when stability is threatened. that is why i want to stress the importance of adequate financial buffers : the umbrella that is needed to avoid getting soaked when there is'a dirty looking sky '. like the importance of trust, the crucial role of buffers is another important lesson we learned from the global financial crisis. a lesson that we turned into action. the changes in sectoral regulations and supervisory standards have made our financial sector safer and better capitalized. the introduction of the macroprudential framework strengthened its ability to absorb rather than amplify shocks. the resolution mechanism has reduced the cost of winding up financial institutions. all these steps have made our financial sector and our economy more resilient to adverse economic shocks. the robust capital position of the banking sector is part of the reason why a major economic shock such as the covid pandemic had a limited overall impact on financial and economic stability. that's why i want to emphasise how important it is for european policymakers to fully and comprehensively implement the global tightening of the banking capital framework - as agreed in basel iv - in the european union. especially now. and from my perspective as chair of the fsb it is positive that we are also strengthening the global supervisory framework for non - banks. these institutions must also learn to carry an umbrella. yes, buffers are essential to consolidate public finances, to ensure financial stability. but not only do we need to be able to adapt to changing conditions and create the conditions to be able to adapt, we also need to be able to bounce back after things go wrong anyway. after'the big snow '. a prime example of successful snow removal was the consolidation of public finances that ireland undertook after the global financial crisis. just how successful ireland was can be illustrated by a simple comparison with spain after that crisis. in both countries the public debt to gdp ratio skyrocketed very quickly. the ratio in ireland went from 30 % to 130 %, but