boris vujcic : adapting to climate change has no alternative speech by mr boris vujcic, governor of the croatian national bank, at the online event " the role of banks in greening our economies ", 29 april 2021. * * * ladies and gentlemen, dear colleagues, let me first welcome all of you who have gathered in front of your screens and decided to devote a couple of hours to join today ’ s conference. it is yet another event that the croatian national bank organizes jointly with ebrd, with whom we have a long lasting and productive relationship. both our institutions have recognized our responsibility to put the issue of banks ’ role in climate transition into the spotlight, and open a discussion on how banks, other financial institutions, and central banks and regulators can properly address the climate emergency that is already transforming our living and working patterns. until recently, it was uncommon for central bankers and bankers in general to talk about environmental issues. so, how did we get to this point, and why should we study the dynamics of climate change and environmental degradation and incorporate it into our business decisions? for more than fifty years people have known that the technological advancement and development that we enjoy comes at a price – the destruction of the environment and a perilous rise in global temperatures. as worrisome scientific discoveries heated up the activism and triggered a grass - roots ecological movement, global institutions and politicians soon embraced the environmental concerns as well. already in 1972, representatives from 113 out of the un ’ s 132 member states convened in stockholm for the first international conference on human environment. their decisions, enshrined in a declaration, action plan and five resolutions seemed to be a clear demonstration of their firm decision to fight environmental degradation. from then on, numerous meetings, conferences, agreements, protocols and declarations ensued, the climate change convention was forged, the kyoto protocol was adopted, but the outcomes fell short of targets adopted in these documents. it wasn ’ t until 2015 when heads of states and representatives of 197 countries, being aware of the real possibility that the world was approaching a climate tipping point, adopted the paris agreement and committed to make sincere and ambitious efforts to drastically cut their greenhouse emissions to prevent further global warming. the agreement, later ratified by 189 countries, did not only result in those countries ’ pledges on ghg emissions, but also in their understanding that engaging in climate change mitigation and adaptation should include a grand coalition of public and private entities devoted to achieving the same goal

to ensure that the increase in economic activity is not achieved at the expense of a deterioration in the external balance. in fact, in 2016 the spanish economy recorded a current account surplus of close to 2 % of gdp and the external balance is expected to perform positively over the medium term, although probably less so than during the last two years. 3 / 8 the normalisation of financial conditions the recovery in economic activity and competitiveness is also related to the decline in financing costs. since the most acute phases of financial stress in the second half of 2011 and in the first half of 2012, there has been a gradual normalisation of the financing costs of firms and households, with less divergence from the interest rates paid by economic agents in other eurosystem countries. the decline in the cost of financing has stimulated business investment and helped to enhance household spending possibilities, with a positive impact on economic activity. the normalisation of financial conditions has also extended to the level of household and business debt, which has fallen significantly in recent years, in relative terms. in keeping with this reduction in private sector debt, aggregate bank lending continues to decline, although at increasingly slower rates. this is the case, in particular, of lending to households and non - financial corporations that do not belong to the construction and property development sector. the outlook for the spanish economy over the next few years according to the latest economic projections published by the banco de espana, the upswing is expected to continue until 2019, although activity will tend to slow on account of, among other factors, the less expansionary fiscal policy stance and steady or rising prices for oil and other commodities, which are expected, in any event, to be higher than over the last two years. with regard to the composition of spending, the less expansionary fiscal policy stance and the squeeze on the income of resident agents, resulting from the rise in inflation associated with the increase in energy prices since early 2016, will somewhat reduce the growth of private domestic demand. net external demand will continue to make a small positive contribution, against a background in which exports are expected to remain dynamic while imports remain relatively weak. the risks surrounding the central scenario the favourable outlook for economic activity i have described is subject to risks originating essentially in the external environment. first, although there has been an improvement in the outlook for world activity and trade, it has been accompanied by an increase in global uncertainty stemming from the greater strength of restrictive positions on trade, migratory movements and international policy coordination, in the area of