margarita delgado : role of the financial sphere in accelerating decarbonisation speech by ms margarita delgado, deputy governor of the bank of spain, at an event jointly organised by the bank of spain, the world wide fund for nature, the ministry for the economy and the ministry for the ecological transition and the demographic challenge, 3 december 2020. * * * good morning, and thank you all for being here, whether in person or online, attending this event jointly organised by the banco de espana, the world wide fund for nature, the ministry for the economy and the ministry for the ecological transition and the demographic challenge, which aims to boost the role of the financial sphere in the process of decarbonisation. the transformation of our economy into a more sustainable model is an unavoidable necessity to which we have committed ourselves as a society and which we have agreed with our european partners. the draft climate change law includes a set of measures that essentially impact what we call the real economy. there are references to the role of the financial sector in just a couple of its articles. a priori, that would seem natural and logical. evidently, the co2 reduction targets directly affect energy production, transport, mining and industrial processes in general. but anybody might well consider that the effects on the services sector or, of course, the banking industry should not be so significant. however, we should not forget that the real economy and the financial economy are largely two sides of the same coin. without one, the other would not exist. financing is a key element for economic activity, and channelling such financing is precisely where we need the banking sector. we have once again been able to witness this owing to covid - 19. as you will recall, the financial sector was declared an essential service during the lockdown. and, for example, without banks ’ active participation, it would not have been possible to successfully structure the ico guarantees programme. naturally, mobilising the resources needed for this transformation, which the law estimates at around €200 billion, will necessarily involve public - private investment formulas in which banks will no doubt play a key role. as you can imagine, financing these public - private investment needs is reason enough for the banking system to become involved. but initiatives such as the climate agreement signed on the occasion of the cop25 and the launch of finresp ( centre for responsible and sustainable finances ) show that the sector is clearly committed. how can the financial economy contribute to switching the real

productivity and better living standards. it will be important not to forget that in the next year or two. nor is it realistic to assume that regulators and central bankers will always have the wisdom and prescience, or even the scope, to deploy their few instruments such as to ensure that an ideal combination of financial stability and high growth can be achieved consistently. the world will never be that perfect. nevertheless, in addition to the many useful steps being planned by regulators, perhaps we could pay more attention to the low - frequency swings in asset prices and leverage ( even if that means less attempt to fine - tune short - period swings in the real economy ) ; we could have a more conservative attitude to debt build - up ; and we could exhibit a little more scepticism about the trade - off between risks and rewards in rapid financial innovation. this would constitute a useful mindset for us all to take from this episode. to conclude, we face difficult circumstances. policy - makers and regulators both here and abroad will need to stand ready to act promptly to provide any necessary support for the financial system and sustainable economic activity. in doing so, though, we need not, and should not, abandon the well - established and tested policy frameworks that are in place. in fact, it is these that have given australia, in particular, ample scope to do what is needed in the current situation. given that we have that scope, and given the underlying strengths of the economy, about the biggest mistake we could make would be to talk ourselves into unnecessary economic weakness. yes, the situation is serious. but, as i suspect ceda members know well, the long - run prospects for the australian economy have not deteriorated to the extent that might be suggested by the extent of some of the gloomy talk that is around. if businesses remain focused on the long - term opportunities ; if markets and commentators do the same ; if banks remain willing to lend on reasonable terms for good proposals ; if governments are able to so order their affairs as to continue supporting worthwhile – and i emphasise worthwhile – public investment ( even if that involves some prudent borrowing ) ; then australia will come through the present period. we ought to go forward with some quiet confidence in our own abilities and in the opportunities that are on offer. i wish you all well in that endeavour.