Christine Lagarde: Macroprudential policy in Europe - building resilience in a challenging environment

Welcome remarks by Ms Christine Lagarde President of the European Central Bank and Chair of the European Systemic Risk Board (ESRB), at the Sixth ESRB annual conference "Addressing financial stability challenges", Frankfurt am Main, 8 December 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

It is my pleasure to welcome you to the sixth annual conference of the European Systemic Risk Board (ESRB).

When future historians look back on our times, they may well say we lived through an era of "permacrisis". An array of powerful shocks – the pandemic, Russia's unjustifiable invasion of Ukraine, and the energy crisis – have hit the global economy in quick succession.

This unstable environment poses sizeable risks for financial stability in Europe. And those risks are further heightened by a weakening economic outlook. At the same time, monetary policy is adjusting to ensure that high inflation does not become entrenched, and that inflation returns to 2% over the medium term.

In September, the ESRB highlighted these financial stability risks by publishing a "general warning". This was the first such general warning published by the ESRB since its creation in 2010, reflecting the exceptional times in which we live.

A key message therein was the crucial importance of ensuring the continued resilience of our financial system. Resilience is key in helping the financial system to deliver on its ultimate goal of supporting the real economy.

There are two facets of resilience that are vital. First, the capacity to withstand an immediate shock. And second, the ability to adapt effectively to new conditions. In my remarks today, I will explore these two aspects of resilience, and how we can best ensure that they are met across the financial system.

After all, the history books about our present times have not yet been written. Our actions today will determine the next chapter. And I have no doubt that if all parties work together, we can master the challenges standing before us.