closing window ’ released in october 2022 3 have once again brought to fore global attention on the measures required and the need for urgent action. the hierarchy of actions and the agencies responsible for the same is getting crystallised while there is a greater degree of agreement on the manner in which to proceed further starting from taking effective steps for reducing carbon emissions, to fostering sustainable patterns of production and consumption and transitioning to a sustainable lifestyle in a cleaner and greener earth. it is also clear that there is no room for differences on the issue and only our collective efforts can address the challenge of climate change. 4. having said that, the question that emerges is what would be the role of different institutions in achieving these objectives? while the overarching policy approach would be guided by sovereign efforts and coordinated by decision - making bodies such as the cop, the financial world needs to ask the obvious question to itself - how can we help? as custodians of financial stability, central banks and policymakers would also be required to evaluate and examine the instruments or strategies they should leverage or focus upon to meet sustainability goals without compromising on their existing policy mandates. these are some of the dilemmas that i would like to highlight today in my remarks. 5. given its wide ranging economic and financial implications, climate - related financial risks are already engaging the attention of international standard setting bodies, central banks, and supervisors globally with the focus on the need to promote the transition to a sustainable global economy. the reserve bank too had come out with a discussion paper 4 on climate risk and sustainable finance earlier this year. besides, rbi had also undertaken a survey on climate risk and sustainable finance among 3 the report can be accessed at https : / / www. unep. org / resources / emissions - gap - report - 2022 4 reserve bank of india - press releases ( rbi. org. in ) leading scheduled commercial banks. there is a general consensus that banks and financial institutions will play a key role in financing the transition to a low - carbon economy and supporting the national climate commitments. 6. while no entity is immune from climate risks, we in india are particularly vulnerable to the climate change related physical risks 5 and hence there is a need to be more alive to the urgency of action6 given our long coastline, high share of fossil fuels in energy systems, and relatively high dependence of rural livelihoods on agriculture. climate trends and events have a direct bearing on the economy and resultantly have an impact on

average rate. business confidence has sunk, the previous reduction in unemployment has come to a halt. the euro - area economy has been hit particularly hard by the oil and food crises. both led to sharp price increases and put the consumer into a state of uncertainty. the oil price shock caused a negative terms - of - trade effect and major reductions in real disposable income. at this juncture, we see the economy of the euro area having lost momentum, after the vigorous expansion in the year 2000. there are, however, several reasons for feeling confident. the waning food crises will no longer weigh on consumption and this year ’ s tax cuts are to come into effect in some euro - area countries. the risks are clearly on the investment side. a major part of the reduction in gdp growth during the first quarter - the latest data available - occurred owing to a lower contribution of gross fixed capital formation. capacity utilisation is still high, and the global outlook does not call for stepping up investment. on the whole, business sentiment, and thus the propensity to invest, hinge on a more optimistic view of the world economy. financing conditions, however, are favourable in the euro area. capital markets rates are about the same level as rates in the us. in an environment of weakening growth the continuation of the consolidation of the public sector ’ s finances is becoming more difficult. in 1997, the european governments decided to implement the stability and growth pact. they agreed to pursue a policy of eliminating structural deficits. in most euro area countries, this process is well advanced. these countries are in a somewhat favourable position, as they have enough room to manoeuvre to let automatic stabilisers work in full. a minority of countries ( germany, italy, france and portugal ) - which, however, account for 70 per cent of euro area gdp - still show structural deficits of a considerable extent. under the present circumstances, therefore, the automatic stabilisers should only be allowed to work fully in those countries whose budget positions are close to balance or in surplus. recently, suggestions have been aired to replace targets for the public sector deficit with targets for public expenditure. i am strongly in favour to stick to the tried and tested deficit target. the public sector deficit is the decisive measure for its demands on the financial markets. the deficit is the benchmark for a government ’ s stability - orientation. last thursday, the governing council of the ecb decided to lower its key