As macroprudential policy does not generally involve ESCB policy decisions, the question of the applicability of the principle of independence under Article 130 of the Treaty is less relevant in this area. A possible exception is the case where macroprudential considerations are taken into account under the second pillar of the ECB monetary policy strategy – monetary analysis. As the specific tools under Article 5 of the SSM Regulation are used, the independence http://www.ecb.europa.eu/press/key/date/2017/html/sp170330.en.html[03.04.2017 15:53:14]  Central bank independence revisited  provisions of the SSM Regulation would be applicable with respect to decisions pertaining to those tools. To that extent, the ECB enjoys, in this particular case, a high degree of operational and financial independence; instrument independence is confined and personal independence is not protected equally for all members of the Supervisory Board in the same way as for the members of the decision-making bodies of the ECB. Rationale for having different mandates for monetary policy, macroprudential policy and microprudential supervision Let me finally elaborate on the rationale underlying the legislator’s decision to keep separate the mandates for monetary policy, macroprudential policy and microprudential supervision. This helps us to understand why it is justifiable to treat different mandates differently and why certain institutional aspects characterising those mandates, like independence, might vary, even within the same institution. The first reason to keep monetary and macroprudential policy separate lies in the differences between the financial and business cycles, which are often de-synchronised or have different amplitudes.

The results show that the long-term benefits of early adoption of policies boosting the transition to a carbon-free economy more than offset the short-term costs of this transition. They also show that if climate change is not mitigated, the materialisation of the physical risks will generate large economic losses, which would be greater in certain geographical areas, with particularly significant effects on banks exposed to these areas. 16  Climate-related financial risks – measurement methodologies, BCBS, April 2021. 6  In terms of their impact on economic activity, the differences between these scenarios are considerable. The short-term cost, in terms of GDP, of measures to mitigate climate change will be greater the later they are implemented. Even so, by the end of the time horizon of the exercise, GDP would be approximately three percentage points lower under the disorderly transition scenario than under the orderly transition scenario, and six percentage points lower under the scenario of no significant measures. These impacts on economic activity lead to a deterioration in the financial situation of businesses and, consequently, in their ability to pay their bank debts. Also, the materialisation of climate risks impairs the quality of bank collateral and increases the losses in the event of default. Given these results, the ECB estimates that the expected losses for the banking sector arising from the impairment of the credit quality of its counterparties and collateral would amount to approximately 3.5% and 8% in 2050 under the disorderly transition and measure-free scenarios, respectively.