Ensuring a sufficiently accommodative stance Risk-free interest rates are the cornerstone of financial conditions across the euro area and are the foundations of our monetary policy stance. Our negative policy rates and our forward guidance on the expected path of policy rates anchor short to medium-term risk-free rates, while our asset purchases and forward guidance on reinvestment steer long-term rates by extracting duration risk from the financial system. The set of monetary policy measures currently in place underpins a risk-free yield curve (as captured by overnight index swap (OIS) rates) that is at record low levels (Chart 5). [3]  Chart 5 Euro area nominal OIS curve (percentages per annum)  Source: Refinitiv. https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp200519~e5203d3520.en.html  4/14  5/19/2020  Pandemic central banking: the monetary stance, market stabilisation and liquidity  Real interest rates – which are at the core of many financial valuation models and act as a fundamental macroeconomic adjustment mechanism by reconciling desired saving and investment patterns – are also at their lowest levels in decades. In comparative terms, a striking feature is that real yields in the euro area are below those in Japan across the curve (Chart 6). Chart 6 Real yield curves (percentages per annum)  Sources: Refinitiv, Consensus Economics and ECB calculations. Notes: Real sovereign bond yields are the difference between the nominal yield and the average Consensus Economics inflation expectation from April 2020 over the corresponding maturity. The latest observations are for 14 May for the euro area, 8 May for the United States and 5 May for Japan.

Technological progress, innovation, and new models of competition are changing the financial industry and there will undoubtedly be winners and losers. Understanding all of the factors that drive successful transformations will be a critical insight for both risk managers and supervisors. Conclusions 3/4  BIS central bankers' speeches  The financial sector is large, complex and constantly evolving due to a wide range of technological, business, and macro factors. Your job, and ours, is to be vigilant and open-minded in our thinking, constantly questioning our traditional assumptions and scanning the horizon to understand how the risk landscape is changing. The topics covered at today’s conference are some of the most important risks that the industry faces. Climate change and digital transformation are two powerful trends with the potential to fundamentally change financial services. We all need to be forward-looking and proactive in order to promote our ultimate goal of a safe and sound financial system that supports the sustainable provision of financial services and economic growth. Thank you for your attention. 1 NOAA National Centers for Environmental Information (NCEI), Billion-Dollar Weather and Climate Disasters  (2019), National Oceanic and Atmospheric Administration. 2 The Impact of Higher Temperature on Economic Growth, Riccardo Colacito, Bridget Hoffmann, Toan Phan and  Tim Sablik, Economic Brief, August 2018, No. 18–08; Climate Change and the Federal Reserve, Glenn Rudebusch, FRBSF Economic Letter, 2019–19, March 25 2019; Fourth National Climate Assessment, Volume II: Impacts, Risks and Adaptation in the United States, U.S. Global Change Research Program.