18 it adds to cyclicality in credit provision and asset prices. us economist robert shiller has suggested it might be possible to devise mortgage contracts that slow, or even reverse, this financial accelerator 19. instead of being fixed in money terms, imagine a mortgage whose value rose with house prices. so the repayment burden would rise automatically with asset prices to slow a credit boom and fall in a recession to reduce the chances of mortgage default. mortgages would operate like a contractually pre - committed debt - equity swap between households and banks. they would automatically stabilise household loan - to - value ratios. by reducing the amplitude of the credit cycle, they ought to benefit both borrower and lender. governments cannot issue equity. but this does not prevent them issuing debt with equitylike characteristics. for example, robert shiller has also suggested governments should bernanke, b and gertler, m ( 1989 ), “ agency costs, net worth and business fluctuations ”, american economic review, 14 – 31. shiller, r j ( 1993 ), macro markets, oxford university press. issue gdp bonds, with coupons which vary with gdp. these would lower the public debt servicing burden at the point in the cycle when public deficits are likely to be largest. in this way, they would help smooth public expenditure and taxation over time. to date, gdp bonds have only been issued by some emerging markets. but in principle, they could serve as a quasi - automatic stabiliser for any country whose public debt experiences cyclical or crisisrelated fluctuations. 20 given recent events, perhaps their day is nearing. conclusion it is said that the longest journey begins with a single step. events of the past twelve months have been a first step – and a big one. but they are just the start of the journey for the financial system and economy as balance sheets are repaired. this adjustment needs to be fast enough to repair balance sheets, but not so fast as to risk a setback for the financial system or real economy. what a hangover requires is neither a day in bed nor a night on the tiles. having taken one big step forward, we should guard against taking two steps back. annex chart 1 equity indices during crises s & p 500 equity index ftse all - share equity index cumulative decline from peak ( per cent ) cumulative decline from peak ( per cent ) 1929 crash 1973 oil crisis current crisis 1929 crash 1973 oil crisis current crisis months from peak sources : global financial

next generation eu is a game - changer. it will provide much - needed support and promote new sources of growth especially for those suffering most from the pandemic. in doing so, it will not only benefit each member state but also the european union as a whole. digitalization and climate change this leads me to two developments that are at the top of the eu ’ s agenda, including yours. developments that will be of major relevance to europe and the ecb for the coming years : digitalization and climate change. the pandemic is accelerating the digital transformation in a way that is likely to reshape our economies and societies. technological innovation in finance is a good thing. it will enable cheaper, faster and more secure services, increase competition and financial inclusion, and thereby enhance peoples ’ welfare. but it raises fundamental questions, including about digital sovereignty, the role of big techs, and about the future development of a digital euro. central banks should stay on top of developments, think long - term, and broaden the dialogue, for example with privacy regulators, infrastructure players and the wider public. the covid - 19 crisis also provides an impetus to the transition toward a carbon - neutral economy. the ecb has a responsibility to contribute – within its mandate – to addressing the longer - term challenges our economies are facing, in particular climate change. 2 / 3 bis central bankers'speeches this requires action today. in this regard, i commend this parliament on its work on the eu taxonomy. the taxonomy is an important step in the process of greening the financial sector. it provides a reliable basis for follow - up policy actions, including greater clarity on what are the most harmful activities. when it comes to monetary policy, the ecb should explore how it could design – within its mandate – its instruments to adequately manage climate related risks and to contribute to unlocking investments that support the green transition. in its supervisory role the ecb must make sure that banks adequately manage climate - related risks. diversity and now i would like to say something on diversity, and gender diversity in particular. i know many of you would have preferred to have a hearing with both a female and a male candidate. i know of your concerns regarding gender diversity. i share them. the european union is founded on equal rights and on the very value of diversity, as expressed in its motto : in varietate concordia. diversity is our treasure, and it is time we unleash its full potential