olli rehn : climate change and green finance keynote speech by mr olli rehn governor of the bank of finland ( at time of speaking deputy governor of the bank of finland ), at the finnish climate summit, helsinki, 13 june 2018. * * * ladies and gentlemen, many thanks for the invitation to this important event, the finnish climate summit. helsinki is in fact today fully tuned to the music of the future, i. e. key future policy issues, since the bank of finland is right now running a three - day conference on the subject “ money in the digital age ” on the other side of the town. i am glad to “ change the club ” for a moment, not least as sitra is originally a spin - off of the bank of finland, some half a century ago. already in 1987, the report of the world commission on environment and development – known as the brundtland commission – defined the need for economic growth to be socially and environmentally sustainable. i am a proud owner of the first edition of that report. already back then, key questions of sustainable development were much the same as today : how to balance its three pillars, i. e. economic, social and ecological development. today, it is widely recognized that climate change is a significant risk to economic growth and financial stability – and to the future of our planet. for instance, the world economic forum concluded in its annual top - 10 list of the biggest risks in terms of impact, that no less than eight of those risks are linked to climate change, one way or another. that should not have been big news. the fundamental problem with climate change was described thus in the stern review in 2006 : “ climate change is the greatest and widest - ranging market failure ever seen. ” this is because climate change is an economic externality, meaning that whoever causes the emission does not pay the full costs of the damage. despite the significant political achievements, like the paris agreement and the kyoto protocol, global policy action still falls short of what is required. the withdrawal of the usa from climate action is of course detrimental. the eu is leading the global effort also in this field. mark carney, governor of the bank of england, has referred to “ the tragedy of the horizon ” : the impact of climate change is felt far in the future, while the costs are immediate, and thus we lack the right incentives to fix the problem. economists might talk about ‘ time inconsistency ’.

olli rehn : counter - cyclical burden - sharing of fiscal and monetary policy opening remarks by mr olli rehn, governor of the bank of finland, at the bank of finland seminar on the 2018 annual report of the european fiscal board, helsinki, 18 march 2019. * * * professor thygesen, dr szczurek, ladies and gentlemen, let me welcome you to this bank of finland seminar on euro area fiscal policy, more specifically on the annual report 2018 of the european fiscal board. we are honoured and glad to have professor thygesen and dr szczurek present the report to us today. let me open this seminar with brief remarks on the interaction between fiscal and monetary policy, which also explains the bank of finland ’ s strong interest on the issue. gdp growth in the euro area turned out to be unexpectedly sluggish in the fourth quarter of 2018, and recent indicators point to substantially weaker than expected activity also in 2019. a combination of global uncertainties and adverse domestic factors in some euro area countries are likely to continue to weigh on euro area activity in the short term. on the back of the weakened economic outlook, the ecb governing council recently took a number of important decisions in pursuit of its price stability objective : first, a commitment to keep the key policy interest rates unchanged for an extended period of time ; second, a commitment to continue reinvesting maturing securities under the asset purchase programme for an extended period of time ; and third, launching a new series of targeted longer - term refinancing operations ( tltro - iii ), starting in september 2019. in the press conference on 7 march, president draghi underlined that to reap the full benefits from the ecb ’ s monetary policy measures, other policy areas must contribute more decisively to raise the growth potential and reduce vulnerabilities. for the longer term, implementation of structural reforms is key to boost euro area productivity and growth potential. regarding fiscal policies, the mildly expansionary euro area fiscal stance today and the operation of automatic stabilisers are providing support to economic activity. however, the prolonged low interest rate environment, as well as the available alternatives to the interest rate as a monetary policy instrument, pose their particular challenges for monetary policy design and transmission. therefore, it may be asked whether a more even balance between monetary and fiscal policy stances would be desirable in order to sustain the growth momentum in the current conjuncture. this point has been brought