of the assumptions underlying this scenario is a complete cut - off of russian gas supplies. and indeed, on 2 september – after the cut - off date for the latest ecb staff macroeconomic projections but before our september meeting – we learned that the nord stream 1 pipeline between russia and germany had been shut down indefinitely. admittedly, the downside scenario also includes other assumptions that have not materialised thus far. however, the cut - off of russian gas is a major determinant of mediumterm inflation reaching such high levels under that scenario. in other words, the upside risks to the inflation projected under the baseline scenario reinforced the need to accelerate the interest rate rises. looking ahead, we will continue our monetary policy normalisation, the pace and scale of which will depend on the materialisation of the risks to our medium - term inflation target at least two risks are and will remain central to our monetary policy deliberations and decisions. first, a potential de - anchoring of medium and long - term inflation expectations above the 2 % level. the materialisation of this risk would be the worst - case scenario, since it would affect the price - and wage - related decisions that firms and households make in the present. this would cause even higher and more persistent inflation, requiring still more forceful monetary policy measures that would harm activity and employment. the information available to date shows no indications of expectations becoming deanchored. however, there are some early signs that need to be watched. the most recent surveys of professional forecasters put inflation in 2024 at, or just over, 2 %. the latest data from inflation - linked derivatives markets ( adjusting for risk premia ) suggest likewise. however, the most recent round of the ecb ’ s monthly consumer expectations survey ( ces ), published in early september, puts the median inflation expectation three years ahead at 3 %, up from just over 2 % at the start of the year. we will be extremely vigilant of these indicators in the coming months. indeed, as i have said, the need to guard against this risk is one of the reasons for the faster monetary normalisation that our latest decisions entail. the second risk relates to possible second - round effects, i. e. when high inflation passes through to wage increases and these, in turn, push up consumer prices as firms seek to maintain ( or widen ) their margins. this scenario is to be avoided, since it would make inflation far more persistent and, thus,

risks were a source of financial risk, and that supervisors and central banks should shore up the system ’ s solvency in the face of these risks. both elements, risk and funding, are clearly interrelated. let´s start from the risk view. in my public interventions i keep on highlighting one essential feature of any viable business model, namely the need to identify and quantify all the costs and risks involved in any given transaction and pass them through to prices and capital. it is well known that the process of transition will entail two types of risks to the financial system : ( i ) on the one hand, the physical risks caused by the direct effects of climate change, as a result of the gradual increase in temperature, or more frequent or more severe climate events such as storms, flooding or natural disasters ; ( ii ) on the other, the transition risks, which refer to the potential effect on specific bank borrowers of the regulatory measures aimed at sustainably transforming the economy, technological changes, and changes in customer behaviour and preferences driven by greater environmental awareness. this leads me to the second element : the contribution of banks to the transition of the economy. of course, if banks incorporate climate - related risks into costs and capital, they indirectly become “ facilitators ” of change, by reducing the cost of financing of activities that 3 / 5 contribute most to the sustainable transformation of the economy, while at the same time discouraging more polluting activities. at the same time, we should stress that the change of production model will also entail opportunities for economic agents, which banks and companies should seize. by way of example, to achieve the eu's 2030 targets agreed in paris, it is estimated that, for the eu as a whole, there is a need to fill an investment gap estimated at 260 billion eur per year. the cost of clean technologies has decreased dramatically – both solar panels and batteries are around 80 % cheaper than a decade ago, for instance – and the potential in terms of growth and job creation is also striking. in this regard, technology, society, regulation and public opinion are aligning to bring about a change towards a more sustainable economic model. banks should, at the same time, nurture that change and exploit the business opportunities stemming from it. nevertheless, we should be mindful of the potentially systemic implications that moving to a decarbonised economy entails, which could affect specific economic sectors. the official sector must assess this process carefully