(2020), “Do shareholders benefit from green bonds?” Journal of Corporate Finance, Vol. 61; Zaghini, A. (2020), “The Covid pandemic in the market: infected, immune and cured bonds” (2020), Covid Economics, Vetted and Real-Time Papers, Issue 50, CEPR Press. 42. At present, seven countries in the euro area issue green government bonds. In total, green debt (also including green bonds issued by suprananational institutions, regional bonds and agencies) currently only represents 1.4% of the ECB’s PSPP portfolio. This share is in line with its market capitalisation. 43. Forward-looking metrics, including measures of sovereign issuers’ alignment with the Paris Agreement, are still being developed for commercially available sustainability data. Furthermore, the  methodology for analysing and reporting the carbon impact of sovereign bonds is comparatively less advanced than for other types of fixed income instruments (including corporate bonds). Currently, data providers mostly follow a production-based approach. Under this approach, a country’s greenhouse gas (GHG) emissions are aggregated based on a territorial definition of production. This definition solely considers where the emissions are originally generated, regardless of the final destination of goods and services. The production-based approach therefore ignores the impact of carbon leakage, whereby richer and highly regulated countries “export” GHG emissions to jurisdictions with less stringent regulation. 44. See NGFS (2021), op. cit. CONTACT  European Central Bank Directorate General Communications    Sonnemannstrasse 20     60314 Frankfurt am Main, Germany    media@ecb.europa.eu  +49 69 1344 7455  Reproduction is permitted provided that the source is acknowledged.
The recent redesign of monetary instruments and the yesterday’s cut of reference CB bills interest rate from 4% to 3.75% are aimed towards conducting of policy at optimal level of reference interest rate. Allow me to elaborate. We were preparing the monetary instruments redesign for a longer time period, and made the actual redesign when we considered that the time was right. The economic activity decelerates because the euro area demand is lower and the credit growth rate is below expectations. Moreover, data on the foreign exchange market and foreign reserves and on the trade deficit in the first quarter indicate balance of payments deficit lower than projected. The inflation rate reduced to around 2%, as expected for this year’s average. The banks, instead of investing the household savings, that increase faster than expected, in lending, purchased CB bills, the amount of which increased by Denar 10 billion, i.e. one third in only three months, even though the capital adequacy and liquidity are at exceptionally high levels. The net external borrowing of the country decreased by Euro 220 million only in the last quarter of the last year, and by Euro 280 million, or by one fourth, over the entire last year. Finally, immediately prior to our decision to redesign the monetary instruments, the Ministry of Finance announced cut of budget expenses by 5%.