There is a tendency by market participants and some policymakers to consider central banks to be “universal problem solvers” whose balance sheets can be used, without cost, for all purposes. There is also a doubt, at least an ambiguity, in the minds of some analysts, about the true purpose of government bond purchases. Central banks’ activism may create doubts as to their ability to stick to their core mandate – price stability – in the face of increasing pressures and constraints. Overall, the euro area is well protected against all of these risks thanks to the robustness of its institutional framework Price stability is unambiguously the priority objective of monetary policy Monetary financing of governments is strictly prohibited The Eurosystem (the ECB and National Central Banks) is extremely well capitalised, which protects its independence. This has allowed the Eurosystem to implement nonstandard measures on a large scale without endangering its credibility. Of course, we do not control fiscal policy. We will never accept a situation where fiscal imbalances could constrain monetary policy. It is very important, therefore, that credible fiscal consolidation takes place across the euro area. This will make it easier for the Eurosystem to be active in protecting financial stability. On the contrary, doubts over governments’ resolve to ensure the sustainability of public finances would make us powerless to fight instability and expose the euro area to great dangers. Now for the more normative aspects. We may have to live with nonstandard measures for a long time.
Whatever the approach chosen, the main challenge would be to take account of climate risks, either through economic estimates that we master – such as GDP observed under stress – or directly through climate variables – such as the rise in temperature – which would require  BIS central bankers’ speeches  3  developing new methods and gathering new information. This, of course, would mean relying on expert judgment on these issues, in a context where financial institutions do not have enough experience to understand future risks. We will work on this with the ACPR and the public authorities concerned. *** Understanding and analysing climate risk is essential. The regulations currently being drawn up – the Act on energy transition and the work of the Financial Stability Board – on information disclosure are useful tools to ensure that the transition to a greener economy is active and therefore under control. These initiatives could also contribute to making market participants more aware of the need to use a discount rate that is more compatible with the transition to a greener economy. The Canfin-Grandjean report of June 2015 also includes many interesting avenues. However, we must at the same time remain modest. We, the public authorities, do not know everything. And we cannot substitute ourselves for private players, whether financial or nonfinancial.