growth. current circumstances, however, are anything but normal, and it is an illusion to believe that backloading consolidation would help to restore confidence. the current crisis is essentially one of confidence. on the other hand, one should not exaggerate the risks of a more restrictive fiscal policy stance, all the more so as the rescue packages and the extremely accommodative monetary policy stance do help to cushion the adjustment. the long - term benefits of frontloaded consolidation, i am convinced, will significantly exceed the short - run negative effects. nevertheless, there is an ongoing discussion on whether the euro area should shift its focus from austerity towards growth. indeed, the crisis cannot be overcome without growth. this is very much undeniable. what is now being hotly disputed is the question of what constitutes the right approach to stimulating growth. after ecb president mario draghi proposed a growth compact, he was getting applause from all quarters as long as he did not spell out what such a growth compact should comprise. he was not promoting a relaxation of the austerity course – either in programme countries or in countries facing close market scrutiny, nor in countries that are considered to have more fiscal leeway. on the contrary : he denied the existence of a contradiction between the goals of consolidation and growth. instead, he pointed to the need for structural reforms in all member states of the euro area, in particular concerning product markets and labour markets. in this sense, i appreciate the portuguese prime minister ’ s support for mario draghi. he was quoted as saying : “ there are no overnight structural reforms and the effects do not show up immediately, but we know that our capacity to grow depends on these reforms. they are the ones we are implementing. ” this could not have been expressed any better and clearer. and i am confident that, once the implementation of structural reforms has started, investors will return even before the effects of these reforms have fully unfolded. those who are currently short in european sovereign debt and the euro will have to decide when the right time has come to go long again. the second requirement for a lasting solution to the current crisis and the prevention of future crises is the much needed strengthening of european monetary union ’ s institutional framework. bis central bankers ’ speeches for me, right now, it has become evident that european monetary union ’ s constitutional setting is far from being sustainable. to make european monetary union sustainable two paths can be followed that i will briefly discuss subsequently : truly improving the

of climate change, again the ngfs has the ability to use its convening power and analytical excellence to contribute to a 1 / 3 bis - central bankers'speeches common understanding. the ipcc is the authority on analysing future climate developments. but our members can help translate the ipcc's scientific insights into financial and economic consequences. many of our members are well - trusted economic advisors to their governments. let us use this role and let us leave no doubt that climate change needs urgent action. of course, this is not only true for governments and policymakers. we, as central banks, are also directly affected by climate change. we discussed how we have to adjust our models to capture these climate - related impacts better. but we did not only take the outside - in perspective, we also looked in the mirror and asked how our action and policies affect the climate and the transition. for example, what are the effects of tighter monetary policy on climate investments in industrialized economies and what does that mean for emdes? 4 nature - related risks our next frontier will be nature - related risks. as the dasgupta report stated, naturerelated risks and biodiversity loss, in particular, could give rise to existential risks for humanity. nature - related risks include climate risks, of course, but they go far beyond. hence, the ngfs has to widen its horizon as well and go far beyond climate. and it is impressive how much progress the ngfs has already made. at the same time, it was humbling to realize just how much more complex the issue is. at first, there were no obvious answers to seemingly simple questions such as : where do we even start? what do we want to measure? which metrics could we use? our task force has made great strides in building a common language and understanding for supervisors, central banks and the financial sector as a whole to use. but as always, laying the groundwork is only the first step. when discussing the work program last year and launching our task forces, we explicitly wanted them to make themselves obsolete over time by gradually integrating their work into our workstreams. hence, dealing with nature - related risks has to become an integral part of our work on supervision, on scenarios, on disclosure for central banks, etc. only then can we make sure that such risks are adequately measured and managed. 5 transition plans looking ahead, dealing with nature - related risks may also involve transition plans – but we are not