the credit and operational risk exposures of banks that would, in turn, translate into profitability and solvency concerns. we also recognize that the bsp has a role to play in the process. in line with this, we have rolled out a two - pronged approach in promoting environmental, social and governance ( esg ) principles. first, through capacity building and awareness campaign, and second by mainstreaming esg principles through the issuance of enabling regulations. we deem that this approach will increase the bsp and the banks ’ understanding of the risks posed by environment degradation and climate change on the financial sector, enhance capacity to manage these risks, and increase banks ’ awareness on the investment opportunities for green or sustainable projects before issuing regulatory expectations on sustainable finance. meanwhile, operationally, the bsp is already undertaking pockets of activities related to green practices. just recently, the bsp participated in the open - ended green bond fund launched by the bank for international settlements as part of sustainable investing in reserve management. the bsp also implemented the mb paperlite facility that resulted in the significant reduction of paper usage during mb meetings, and installed energy - efficient mechanisms such as solar panels and inverter technology in air - conditioning systems. lastly, the bsp will be issuing esgrelated regulations in phases. all of these are part of our commitment to adopt a culture that embodies sustainability. earlier i mentioned the two - pronged approach for sustainable finance. as we build institutional capacity, we argue that sustainable finance is ultimately a public good. when done right, sustainable finance can translate into profitable investments, while at the same time attain environmental and social objectives. 2 / 4 bis central bankers'speeches we also subscribe to the idea that financial regulation can be a useful tool to contribute to the achievement of national and international environmental and social objectives. in this regard, the bsp has been actively involved in global and local conversations on sustainability though our membership in the sustainable banking network, alliance for financial inclusion and asean. we also participated on a study on banks ’ perceptions on sustainable finance as well as engaged in capacity building initiatives for both internal and external stakeholders in partnership with both local and international development partners. on the regulatory pathway, the bsp believes that the optimal approach remains to be one that is “ enabling ” – one that provides ample flexibility, sensitive to risk - appetite and business models, and proportionate to the banks ’ size, structure and complexity of their operations. this approach aims to shift

26. 06. 2018 taking up of office by the governor of the banco de espana pablo hernandez de cos governor honourable ministers and authorities, ladies and gentlemen, dear colleagues and friends, i believe today calls, above all, for a round of gratitude. first, i wish to thank ministers calvino and montero for their presence here today. may they rest assured i am firmly committed to maintaining the close and loyal collaboration traditionally offered by the banco de espana to the ministries for the economy and finance. i also wish to thank the previous minister, roman escolano, for his presence at this ceremony, and for his proposal and defence of my appointment before the parliamentary committee for the economy and competitiveness. and my gratitude extends to the representatives of the committee accompanying us today. i undertake to make every effort to improve the capacity of the banco de espana to face the challenges addressed during the parliamentary committee hearing. ministers, as i am surrounded above all by colleagues, i trust you will allow me to continue in a more informal tone. as you know, including a three - year tour at the european central bank, i now have two decades behind me at the banco de espana. professionally speaking, this is, then, my home. it is a real honour for me to have been appointed governor. but, above all, i feel a great responsibility at having inherited the enormous legacy of an institution with the history, functions and position in the spanish economy of the banco de espana. i wish to begin this new stage thanking those people who have steered my career over the years. i have learnt from all of them and their teachings have been a source of wealth for me. my sincere thanks to all of them. thanks, of course, to jose luis malo de molina, under whose leadership of the research department i have pursued most of my career, and, among others, eloisa ortega and jose maria bonilla. they were most forthcoming with their trust and have, at different times, been a major source of guidance and support for me. thanks also to fernando restoy, above all for being a point of reference in terms of competence and dedication to public service. thanks especially to jose manuel gonzalez paramo, who oversaw my ph. d. and took me to frankfurt. that experience gave me, early on, a first - hand view of the work of the european central bank and of the banco espana ’ s potential as a member of the eurosystem. naturally, my greatest gratitude is