External asset managers are used to benchmark internal portfolio management and obtain more efficient access to certain asset classes. The SNB was also among the first central banks to adopt a structured approach to managing non-financial aspects, such as ESG risks. How does the SNB factor ESG risks into its balance sheet management? I would like to start with our bond portfolio, which accounts for 80% of our foreign exchange reserves. Most of this portfolio is made up of government bonds. Other bonds, such as corporate bonds, represent 12% of our reserves. Our bond portfolio is actively managed in terms of country selection and weighting. In other words, while we use a combination of broad bond indices, we deviate from these – within pre-set limits – in order to generate a higher return. Our portfolio managers use all the information at their disposal to guide their investment decisions. This comprehensive assessment essentially includes all types of financial risk that may arise in one form or another. Factoring climate risks into risk assessment is therefore an integral part of good portfolio management. In this context, it is worth mentioning that, for some years now, the SNB’s bond portfolio has included green bonds. As their name suggests, these are bonds whose proceeds are used to finance environmental projects. What about our equity portfolio? In our equity investments, we pursue a passive and neutral approach (index-linked management).
As such, the global recovery will be based on trust and solidarity between nations. Is such cooperation possible? Europe is a case in point. Let´s take again the example of vaccines. When the prospect of a common vaccination pool and 2/4  BIS central bankers' speeches  the purchase of vaccines on an uncoordinated basis was aired, European institutions took the decision to cooperate. That has allowed vaccines to be provided at the same time for countries with very different production or vaccine-purchase capabilities. It is an example of cooperation worth exporting to global vaccination programmes. Another example is the case of the policies needed to tackle climate change. The European Union has pioneered a system of cross-country carbon emission rights. This mechanism, according to recent studies, has led to a reduction of more than 10% in the emissions of regulated companies.3This coordinated effort has seen the EU commit to a binding target of a net domestic reduction of at least 55% in greenhouse gas emissions by 2030 compared to 1990. It far exceeds the commitment to cut emissions by at least 40% under the Paris Agreement. Again let us view the European Union as a laboratory for what the multilateral effort can – ideally – achieve. European economic institutions: unfinished work However, in order for Europe to play this role properly, Europe should deepen its own integration project. Only by addressing the remaining challenges of our political and economic integration process, we – European – can aim to contribute decisively to global objectives.