itself. he has shown that delegation improves sub - optimal outcomes, but only to the extent that there are important costs of “ reappointment ”. with reappointment costs of delegation the inflation bias is reduced, but not completely eliminated. the central bank gains credibility if an announced action coincides with the expectation of market agents about this action, i. e. if the targeted money growth rate equals the expected growth rate. reputation is more similar to a capital good, growing slowly by means of a series of credible actions and eroding quickly if the central bank attempts to deceive the public ( cukierman, 1992, p. 205 ff. ). as a general principle, credibility facilitates interpersonal relationships. credibility is capable of substantially reducing transaction costs. experience shows that those central banks which have a successful track record of stability are most likely to enjoy credibility. very broadly, such a successful track record is characterised over the long term by low inflation with very little fluctuation. positions supported by the bundesbank for a long time are now widely accepted among policy makers and in the literature : “... deliberate attempts to exploit any short - run trade - offs between output and prices are likely to result in a permanently higher and more variable rate of inflation, with significant adverse consequences for resource allocation, long - run output and productivity growth. ” ( lamfalussy, 1997, p. 12. ) when prices rise, the crucial factor is the underlying cause. a fundamental consideration in building up and defending an anti - inflationary track record is that the central bank should never resort to the instrument of unanticipated inflation. if the public feels duped by the central bank, that central bank forfeits its credibility for many years to come. if, on the other hand, prices rise for exogenous reasons, the subsequent anti - inflationary policy course can actually enhance the central bank ’ s reputation. the phase following german reunification is a case in point. obviously, the new ecb will have no established track record to inspire confidence. to what extent the accumulated credibility of national central banks which will make up the european system of central banks from the beginning of stage three can be transferred to the new institution is an open question. “ reputation has its roots in decisive and goal - oriented action ; it is bound to an institution and cannot be simply bequeathed. ” ( svr, 1997, p. 353, translation. ) one must therefore

sabine mauderer : transition plans – the next step on the path to net zero? speech by dr sabine mauderer, member of the executive board of the deutsche bundesbank, at the annual general meeting of the international capital market association ( icma ), paris, 26 may 2023. * * * check against delivery 1 welcome dear ladies and gentlemen, i am delighted to be here with you today at the palais brongniart. this place was home to the french stock exchange for almost two centuries. the buzz and excitement of the former trading floor can still be felt today. stock exchanges not only produce winners and losers. they also serve a vital role in the functioning of the economy. namely, they provide a marketplace for capital seekers and investors, and maintain the infrastructure for a broad range of investment products. stock exchanges hence also play a vital role in mobilising capital for the transition. indeed, capital needs are high in order to meet the targets under the paris agreement. estimates of the global investments needed to achieve the paris agreement's temperature and adaptation goals range between usd 3 to usd 6 trillion each year through till 2050. 1 spurring investments of this scale requires not only an enabling environment, but also the right regulatory incentives. the eu taxonomy is a starting point, as it provides investors with reference points for their decision - making. nevertheless, the eu taxonomy can be quite complex and currently does not adequately reflect the idea of transition financing. one of the most urgent challenges will be to assist carbon - intensive companies decarbonise. raising financing for businesses that are not yet green and which may never be fully green – that is the hard bit. it is also the focus of my speech today – moving from ambition to action. 2 transition plans in this regard, transition plans can be a powerful tool. they outline the concrete steps that firms are planning to take in order to align their strategic actions with a world that is moving towards net - zero. simply put, a transition plan can help investors to assess whether a company or a project is investable. the same goes for financial institutions, which will be the authors and users of transition plans at the same time. naturally, their own transition plans will only be as good as those of their corporate clients. by means of transition planning, financial institutions can align their business lending with their own transition pathways. 1 / 5 bis - central bankers'speeches the benefits of net - zero transition plans are clear. what is less