I. Monetary policy is doing its duty, and has already done a lot  I am well aware that some recent monetary policy decisions of the Governing Council are hotly debated in Germany. The expression of such criticism reflects, at a minimum, the need to explain our monetary policy decisions better. However, I’d like to argue that our recent monetary policy decisions are very much in line with the principles of stability that German culture incarnates so well. Let me elaborate on three of these principles. First, independence. The divergent inflation performance of the major industrialized economies after the collapse of the Bretton Woods system had a profound effect on the subsequent conduct of central banks. On the practical side, Germany was seen to have navigated the so-called stagflation episode of the 1970s considerably better than others. The Bundesbank was role model for the independence of other central banks. Second, a clear mandate for price stability. The Eurosystem was built on these foundations as enshrined in the Maastricht treaty. We also adopted, as early as 2003, a transparent quantitative definition of price stability as an inflation rate close to but below 2% over the medium term – very close to the present definition of the US Fed, the BoE or the BoJ: so this is nothing new or specific to the ECB. From 1999 to 2011, the HICP inflation rate averaged 2% in the euro area, remarkably consistent with the objective.
In the same vein, we do not have previous experience of structural changes of this magnitude, which also require a very long term perspective, and where the presence of non linearities and irreversible tipping points are likely. In this regard, national and international regulatory and supervisory authorities have an important role to play to fill in these data gaps regarding banks’ exposure to climate risk, by collecting more granular data by location, sector and also at the firm level. And, in parallel, we have to use all our research capabilities to better quantify the climate change consequences on risks to financial stability, and the effect of potential mitigation measures. And these efforts must be coordinated globally to ensure adequate standards and comparability across regions. From the purely central bank perspective, I think it is also important to frame our actions in this field taking as a basis our price stability objective. Here again I think that, in our pursuit of price stability, we cannot ignore the transition and physical risks that I have mentioned before. Insofar as they affect the macroeconomy, the transmission of our monetary policies or the inflation outlook, then such risks are bound to affect the conduct of monetary policy.