And a third important response is to recognize that these incremental improvements will be more drastic for some institutions and less drastic for others. The general principle, I think, is that the complexity and focus of both the supervisory examination and the capital requirements should be determined by the complexity, diversity, and perhaps the scale of the organization being examined.
Although the Covid-19 pandemic is still raging in some parts of the world and disrupting economic activity, particularly in China, we are in the middle of another crisis. Russia’s brutal, illegal war in Ukraine has profoundly transformed the European security order and the economic policy landscape. Before the war broke out, the euro area economy had recovered better than expected from the pandemic.