That includes ensuring that the common monetary policy is properly transmitted to all sectors of the economy and to all countries, and to prevent the financial fragmentation of the area. We also stand ready to adapt all our instruments should it be necessary. Naturally, we must also remain vigilant regarding the risks to financial stability. Evidently, the banking sector is facing this crisis from a healthier position than in the previous recession, which highlights the importance of the far-reaching changes made in this sector over the past decade. The ECB has also taken resolute action here. Among other measures, it has allowed banks to use the capital buffers available, which were created precisely for situations such as the present one. But, undoubtedly, the crisis will significantly impact the quality of banks’ credit portfolios, on a scale that will depend on its ultimate severity and which will be uneven across banks. The outcome will depend on banks’ starting position, on their business model and on the distribution of their exposures to the sectors and regions most affected by the pandemic. Accordingly, we supervisors must continue to closely monitor the risks to financial stability and we must be ready to provide a forceful, panEuropean response should such risks materialise. In short, European and national economic authorities must share the objective of preventing the current crisis from being accompanied by an across-the-board tightening of financing conditions or from seriously harming the stability of the financial system.

Though the results of this journey may not be immediate, the transition must begin without delay. A key priority for financial institutions (FIs) will be to implement sustainability risk management practices. The VBIAF sectoral guides for the palm oil, renewable energy, and energy efficiency sectors, as well as the Climate Change Principle-based Taxonomy which are the outcomes of collaboration between financial regulators, industry practitioners and sector experts, have been issued during the past year. The former can provide context on the importance to incorporate 1/3  BIS central bankers' speeches  ESG considerations in FIs’ financing and investment decision-making process, while the latter can provide guidance for FIs to assess and classify economic activities that contribute to climate change mitigation and adaptation. This will allow a deeper understanding of the impact of climate risk to the FI, and enable leaders to better identify the organisation-wide strategies and resources required to manage such risks. Secondly, leaders must drive innovation to deliver value-driven and impactful solutions. This is very much in-line with VBI which advocates for positive and sustainable impact through the practices, offerings and conduct of institutions. Alongside regulatory efforts to rebuild economic and social resilience, FIs can play a leading role in making meaningful or impactful contributions to economic and social development through strategies that prioritise the triple bottom line. Value-driven and impactful solutions are more evidently required throughout this pandemic. The devastating economic impact of COVID-19 is apparent in certain sectors more than others, and especially for vulnerable communities.