Regarding the first one, the publication at the beginning of the month of the last contribution to the IPCC 6th assessment report on climate change mitigation reminds us of the need for an urgent transition toward carbon neutrality, which will entail major transition risks for banks. Supervisors have already started to assess the exposure and disclosure of financial institutions to those risks to incentivize them to identify, assess and manage those risks as mainstream ones– and the ACPR played a pioneering role in this respect, with the achievement of the first bottom-up climate risks stress-test last year. From now on climate risks will be progressively integrated into the prudential framework,  starting with pillar 3 and pillar 2 requirements. Banks must step up their efforts to prepare meeting these forthcoming regulatory requirements, including those related to climate stress-tests and banks’ transition plans, which are part of the CRD6 proposal currently in negotiation. As regards the pillar 1 framework, let me note that the integration of climate risks is still a hotly debated topic and I hope the upcoming publication of a discussion paper by the EBA on this issue will allow us to move forward. We shouldn’t jump to conclusions though. There are many methodological and data shortcomings to address before implementing new requirements. In any case, let me emphasise that from my supervisory perspective the pillar 1 should remain risk-based and that we should overcome the green / brown dichotomy by assessing transition risk on the basis of the transition plans instead.
We will see whether these expectations, which are very volatile, will be vindicated by the actual decisions of the governing Council as they will remain data driven and will reflect their assessment of the outlook. However, I believe it is fair and safe to say that the interest rates environment is likely to change after a long period of very low interest rates. As a supervisor, the current downside risks to growth and upside risks to inflation, and the associated perspective of a normalization of monetary policy of the euro area, make it all the more relevant to maintain credit and market risk management of banks, including exposures to vulnerable sectors, to leverage finance and to shocks in interest rates and credit spreads, a top SSM supervisory priority. 2.Financial stability situation: the risks associated with indirect exposures 1/4  BIS central bankers' speeches  Normalization of monetary policy will certainly come with a rise in interest rates. An orderly rise in interest rates as well as the direct exposures, which are small and concentrated, of euro-area financial intermediaries to Ukraine and Russia, are not likely to threaten financial stability. Through these direct exposures, the financial stability impact of the war has been well contained so far. However, the outlook is uncertain as vulnerabilities associated in particular with markets underpricing of risk, NFC high level of debt and exposure to cyber-attacks may unravel through indirect exposures and amplification mechanisms.