The preconditions for continued growth of the euro financial markets are good. The euro capital market offers private issuers of debt securities and equities considerable advantages. The greater number of issuers and investors who settle their transactions in the same currency enhances liquidity and allows larger issue volumes. This reduces refinancing costs.
Needless to say, climate policy is a much more multi-faceted problem than monetary policy, and its effects materialize over a longer time horizon. The risk of policy reversals is very real, though: The transition to a carbon-neutral society can have short-term costs for households and firms. The positive long-term effects are not immediately visible. This can weaken political support for climate policies.