Therefore the developments in these expectations play an important role in Central Bank analyses and evaluations. In this framework, analyzing the inflation expectations for the next 12 months and 24 months as of April, the following points emerge: Though consumer inflation expectations for the next twelve months have declined, the rate of decline has been slowing down significantly since February and expectations have to some extent been  6  BIS Review 67/2006  following a horizontal course. The fact that long-term consumer expectations relating to the next 12 and 24 months are slightly above the targets is interpreted as a development that requires prudence with respect to the falling inflation process. Nevertheless, the course of longer-term expectations at low levels is an encouraging development as regards the success of inflation targeting (Graph 9). Graph 9. CPI Expectations Regarding Next 12 and 24 Month Periods (Annual Percentage Change)  9 Next 12-Month  8  Next 24-Month  7 6 5 4 Apr-06  Feb-06  Dec-05  Oct-05  Aug-05  Jun-05  Apr-05  Feb-05  Dec-04  3  Source: CBRT. Supply and demand developments Supply-demand balance Distinguished Guests, At this point, I would like to touch on our evaluations relating to supply and demand developments in the light of national income data released at the end of March. In the last quarter of 2005, Gross Domestic Product (GDP) increased by 9.5 percent compared to the same period of the previous year. Hence, GDP growth was realized as 7.4 percent throughout 2005.

Chart 7: A selection of ‘green bond’ structures  One concern sometimes expressed with this first generation of green bonds is that there are no binding requirements as to what constitutes a green project, and hence bonds may sometimes be labelled green on spurious grounds.33 There have been various attempts to address this issue, for instance the Climate Bonds Initiative’s Taxonomy and Certification Scheme34 and the European Union’s Green Bond Standard35, which set out more robust scientific criteria for identifying projects which genuinely help with climate change. The model also requires an issuer to have fairly sizeable green capital expenditures in order to issue a bond liquid enough to appeal to mainstream investors. 31  https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/Green-Bonds-Principles-June-2018-270520.pdf BIS Quarterly Review, September 2020 33 Consistent with this, researchers have so far failed to identify a near-term relationship between green bond issuance and subsequent reductions in carbon emissions (https://www.bis.org/publ/qtrpdf/r_qt2009c.htm) – though there clearly are many possible reasons for this result, not all of which suggest greenwashing. 34 https://www.climatebonds.net/standard/taxonomy 35 https://ec.europa.eu/info/business‐economy‐euro/banking‐and‐finance/sustainable‐finance/eu‐green‐bond‐standard_en 32  13  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  13  An alternative approach is to link some element of the financial return on the bond to the achievement by the issuer of a particular climate sustainability outcome, without linking the bond to specific green expenditures.