However, we note that the channelling of special drawing rights by EU national central banks to multilateral development banks or individual countries would not be compatible with the EU's legal framework. Supporting international cooperation and strengthening the global economy Recent global shocks and geopolitical tensions have advanced the debate about reconfiguring global supply chains. While the increased resilience associated with less complex supply chains is desirable, a less integrated world economy also entails costs. It weakens the diversification of global production and, in particular, the efficient allocation of resources globally, which has an adverse impact on welfare across the world. Geopolitical fragmentation may also affect the global economy via financial channels. The availability of external financing may be impeded, and lower foreign direct investment would hinder the diffusion of technology and thus productivity growth. All of these developments require our immediate attention; however, we are not losing sight of longer-term challenges and are keeping up our efforts to address the existential crisis of climate change. As part of our action plan to incorporate climate change considerations in our monetary policy framework, we decided to tilt corporate bond holdings towards issuers with better climate performance, through the reinvestment of redemptions starting in October 2022. Our climate-related financial disclosures showed last month that this effort was helping reduce the carbon footprint of our corporate sector portfolios. In addition, we are adjusting the collateral framework, introducing climate-related disclosure requirements, and enhancing risk management practices. Recently, we have also issued statistical indicators for climate-related analysis.

Financial innovation is good and healthy for our economies. Changes that have occurred in the last years strongly contribute to market efficiency and overall increase the resilience of our financial system. By allowing wider spreading of risk through credit derivatives, in particular, hedge funds bring an important contribution to market efficiency and liquidity. At the same time, the implications of those changes for financial market dynamics might be more complex and far reaching than before. New instruments have been developed in a very benign environment. Liquidity in many market segments has not been tested in period of stress. How these instruments would behave in periods of stress is a major question for market participants and authorities alike. In such an uncertain environment, securing the full benefits of the structural shifts in the financial system does put a premium on risk management. Everybody would agree, I think, that the first mitigant against the risks associated with hedge funds is robust internal risk management systems, both in hedge funds themselves and at their prime brokers. These are the basis for an efficient market discipline and a condition for financial stability. Strong and rigorous implementation of sound principles for risk management seem essential. You have noticed the reference, in yesterday's G7 communiqué, to the Paulson's task force (Presidents Working Group).