cost 3 % of gdp i, of floods in pakistan with losses and damages equivalent to 8 % of gdp ii, or of the recent rise of food prices everywhere – : hence we have to deal with the effects of climate change on the economy. it ’ s not mission creep, it ’ s not a politicisation of our mandate, it is our core business and core duty. as regards the eurosystem, in addition to our primary objective of price stability, it just happens that environmental protection is among our secondary objectives : but this is only an icing on the cake, if i may put it this way. so i would like to focus today on what i will call the macroeconomics of climate change. i will not spell out everything we do as supervisors : first disclosure of risks, climate stress tests at present and financial institutions ’ transition plans tomorrow. i would instead like to talk about what is at least as important – modelling the economic effects of climate change – but page 3 sur 8 about which we currently know less. i will first acknowledge a veil of uncertainty, before nevertheless establishing four firm convictions. a veil of uncertainty as we try to understand and figure out how climate change will shape macroeconomic changes, the “ veil of uncertainty ” is primarily due to future political decisions regarding climate change mitigation. for instance the initial level and evolution of a carbon price, or the amount of green investment and public subsidies will be particularly relevant. this is why we are currently working on several scenarios, both over short and longer term. six long - term scenarios, that is to say with a 2050 horizon ( and even the end of the century for some variables ), have been developed and will continue to evolve under the aegis of the network for greening the financial system ( ngfs ) iii [ slide 3 for a focus on 3 scenarios ], to whose 144 institutions the banque de france provides its global secretariat. the current scenarios, which are consistent with the various physical scenarios of the ipcc, will soon be supplemented by a seventh scenario of “ net zero 2050 ” achieved through greater energy sobriety ; the publication of the updated ngfs scenarios is expected next autumn. in their current version, they are already used by a great number of supervisors – the majority of the 36 jurisdictions that page 4 sur 8 have conducted a climate stress test ( for instance france, the eu, the uk and the us ). our pilot stress tests also pointed to a need for shorter -

banks as well as temporary purchases of assets, both private and public. circumvent the zero lower bound and bring down real long - term interest rates through purchases of government bonds, and / or interest rate guidance. as a consequence, central banks ’ balance sheets expanded by a factor of three, dramatically increasing their role in financial intermediation and sometimes raising concerns, at least in some quarters, about the possible inflationary impacttogether, this diversification and the increase in size have created more complex interactions with fiscal policies. specifically, asset purchases are sometimes seen as “ quasi fiscal policies ” both on the asset side ( due to the potential risks attached ) and the liability side ( when they contribute significantly to meeting the funding needs of the sovereigns ). bis central bankers ’ speeches at the time they were decided, those exceptional interventions were absolutely necessary. although it had been forgotten, central banks were initially created to protect the economy from excessive financial disturbances. this was, historically, their “ raison d ’ etre ”. as ultimate and unique providers of liquidity, they cannot escape this responsibility and let the financial system and the economy collapse. at the same time, by doing so, central banks have exposed themselves to a number of risks first, there are risks linked to balance sheet expansion. they cannot be ignored, although all central banks have been extremely careful in valuing the assets purchased or taken as collateral. second, they run the risk of blurring the lines between fiscal and monetary responsibilities. a dynamic use of their balance sheets by central banks has effects on the allocation and distribution of resources in the economy. they may favour or penalise some types of collateral or certain borrowers. if central banks take on additional responsibilities in the area of financial stability, they will have to do so in close cooperation with fiscal authorities, thus exposing themselves to possible interferences with monetary policy. the major risk, however, is the risk of confusion. a multiplicity of interventions could be interpreted as a relative dilution of objectives. there is a tendency by market participants and some policymakers to consider central banks to be “ universal problem solvers ” whose balance sheets can be used, without cost, for all purposes. there is also a doubt, at least an ambiguity, in the minds of some analysts, about the true purpose of government bond purchases. central banks ’ activism may create doubts as to their ability to stick to their core mandate – price stability – in the face of increasing pressures and constraints.