believe that such purchases should be reserved for exceptional situations. the pandemic is undoubtedly just such an exceptional situation. the key issue for me here is that monetary policy must maintain a [UNK] distance from monetary ﬁnancing of government. this includes ensuring that incentives for sound public ﬁnances are maintained. the disciplining effect of the capital markets on ﬁscal policy has an important role to play. market participants use differences in bond prices to signal how much conﬁdence they have in the soundness of a country ’ s public ﬁnances. yield spreads between bonds issued by member states with different credit ratings must therefore not be artiﬁcially levelled out. and that is also why i believe that the percentage of outstanding government bonds held by the eurosystem should not get too big. otherwise, central banks could acquire such a dominant market inﬂuence that the market ’ s disciplining effect on public ﬁnances will ultimately be undermined. in order to contain this risk, the ecb governing council has staked out important safeguards in the public sector purchase programme ( pspp ), which has been running since 2015. the pepp also has such safeguards in place. it was, however, designed to be more ﬂexible than the pspp in order to allow monetary policy, if necessary, to exert an inﬂuence on individual markets in a more targeted manner. this ﬂexibility should not, however, be understood as a lack of bounds. once net purchases are over, the distribution of the stocks of government bonds purchased shall once again be guided by the ecb ’ s capital key. when the pepp programme was introduced, it was also particularly important to me for it to be temporary and clearly linked to the crisis. after the pandemic, the emergency monetary policy measures must be terminated. we must be careful that they do not become a permanent ﬁxture. and we must likewise not forget that the monetary policy stance was exceptionally accommodative even before the coronavirus hit. central banks could ﬁnd it increasingly [UNK] to change their expansionary stance in a timely manner. given higher levels of government debt, central banks could come under pressure to hold interest rates low for longer than required by the objective of price stability in order to keep states ’ 8 / 13 funding costs down. how great the danger of such ﬁscal dominance is depends, in part, on expectations. if politicians take the view

objective of price stability. these insights are required elsewhere at the bundesbank as well. the idea is for them to form the macroeconomic framework for analyses of how vulnerable our ﬁnancial system will be under various climate scenarios. stress tests planned for the years 2022 - 23 to capture the impacts of various co2 price paths on ﬁnancial stability in germany represent a key milestone in this respect. this is because both the physical impact of climate change and the transition to a climate - neutral economy can be sources of ﬁnancial risks. today already, banking supervisors expect credit institutions to incorporate climate - related ﬁnancial risks into their risk management framework appropriately. consideration of these risks is a focal point of the supervisory dialogue with institutions and the discussions with associations. in parallel, we are looking into the extent to which the supervisory framework needs to be adapted to further specify the requirements for climate - related ﬁnancial risks. in 2022, the ecb will conduct a climate stress test for europe ’ s large credit institutions. in addition, the bundesbank ’ s banking supervisors have begun to develop stress tests with which they can study the resilience of german institutions under various climate scenarios. climate - related ﬁnancial risks can also affect central banks ’ securities holdings, though, including our monetary policy portfolios. our risk management should incorporate these climate - related risks, too, like other ﬁnancial risks. one problem here is the lack of a consistent, robust dataset. just like banks, insurers and other actors, central banks need better information here. we need to protect our balance sheet – and thus also our ability to maintain price stability. that's why there are two options i have repeatedly been stressing. first, the eurosystem should get to the point where, for monetary policy purposes, it only purchases securities or accepts them as collateral if their issuers meet certain climate - related reporting obligations. second, we should examine the idea of using only those ratings into which rating agencies have incorporated climate - related ﬁnancial risks appropriately and transparently. neither of these measures can be introduced immediately : issuers need time to provide this information, and only once this information is available can rating agencies drill up and adapt their assessment procedures. 10 / 13 both measures can ultimately also affect the composition of our monetary policy portfolio of corporate bonds. however, it should not be forgotten that the monetary policy portfolios will remain on our balance sheet only as long as needed for