unsustainable external borrowing. effective policy coordination would also bind monetary policy towards achieving its price stability mandate, thus reducing long - term risk premia and supporting financial stability. as a corollary to all what i mentioned, a weak stance in one policy area burdens the other policy area with excessive demands. this brings me to the specific topic of this panel : conducting monetary policy when fiscal space is limited. bis central bankers ’ speeches the aftermath of the recent crisis left all economies in the region struggling to reignite economic growth. most of the countries are doing this while at the same time facing the pressing need to consolidate their public finances. albania is no exception. although the repercussions of the crisis were not so severe, economic growth has almost halved compared to its pre - crisis trajectory. aggregate demand is unable to generate full employment of labor and capital, while cpi inflation has continuously undershot our target. in this economic landscape, our monetary policy has taken an ever more expansionary stance : the policy rate – now at 1. 25 % – is at a historical minimum, which would have been unthinkable a few years ago ; we have increased our liquidity injection operations as well as expanded the range of accepted collateral ; and we have also made use of conditional forward guidance as an alternative instrument of monetary policy. on the other hand, our public debt jumped from around 55 % of gdp in 2008 to around 72 % of gdp today, on account of the joint action of automatic stabilizers and some degree of countercyclical fiscal stimulus. however, this fiscal expansion was thought to be unsustainable, especially given the difficult financing conditions in international financial markets. it was also thought to be counterproductive, because of crowding out concerns in the presence of tight liquidity conditions in domestic financial markets and because of negative feed - back loops through higher risk premia. as a result, our fiscal policy is now locked on a consolidation path, aiming to bring the public debt below 60 % of gdp within the end of this decade. this means the monetary policy remains the only countercyclical tool to stimulate economic activity. taking everything into account, i believe fiscal consolidation, coupled to an expansionary monetary policy, delivers the correct policy mix in the country. however, given our experience so far, i would like to conclude my speech on three observations : – first, monetary policy remains effective even in the presence of fiscal consolidation. in albania, we have been able

crucial role of banks in funding energy - efficient investment projects. [ 5 ] empirical studies also suggest that high equity investment underpins the transition by flexibly allocating funding to low - carbon sectors, as well as by supporting green innovation in carbon - intensive sectors. [ 6 ] finally, research indicates that green bond issuance by companies may be associated with an improvement in their environmental performance. however, environmental externalities due to missing or insufficient carbon pricing mechanisms continue to distort the pricing of climate risks by financial markets, thus decelerating the green transition. [ 8 ] since climate change is partially irreversible, such delays could prove detrimental. in fact, the preliminary results of the ecb ’ s ongoing economy - wide climate stress test illustrate that the magnitude of long - term physical climate change risks by far exceeds the short - term transition costs associated with more stringent mitigation policies, as described by vice president de guindos in a recent blog post. [ 10 ] other research corroborates the finding that an early and orderly transition is likely to reduce the extent of economic disruption associated with climate change. central banks can act as a catalyst to facilitate an orderly transition towards a greener economy. although central banks ’ leeway to address climate risks within the remit of their mandate is still subject to debate [ 13 ], there are an increasing number of commentators who argue that central banks should take the implications of climate change into account. first, central banks should ensure that climate risks are adequately incorporated both in their own risk management and in that of the financial institutions they supervise. second, central banks can have an important role in fostering climate - related information disclosure by firms and financial institutions. finally, central banks have an array of potential instruments at their disposal to incentivise the issuance of green financial products. however, we need to proceed with caution : as a european institution with statutory independence, the ecb is strictly bound by the provisions of the union ’ s legal framework. before considering specific avenues to address the implications of climate change, we therefore need to thoroughly explore whether the treaties provide a sound legal basis for the ecb to support society ’ s collective effort to combat climate change. the legal basis for ecb policy action both our primary and our secondary mandate provide potential legal foundations for the ecb to consider its role in addressing the challenges arising from climate change. in fact, as i have argued previously, our primary mandate requires us to take climate change