next, i will discuss the need for public intervention to ensure an alignment of interests ( ii ). i / the financial sector and civil society are already mobilised. cf. moody ’ s, “ impact of carbon reduction policies is rising globally ”, march 2015. mark carney, “ breaking the tragedy of the horizon – climate change and financial stability ”, speech given at lloyd ’ s of london, 29 september 2015. bis central bankers ’ speeches this mobilisation, which has yielded progress, appears to have occurred in three main phases. first, the major public financial institutions were at the forefront of this movement. this is the case for the european bank for reconstruction and development or the caisse des depots, with its subsidiary cdc - climat. the european investment bank estimates that it currently grants 25 % of its loans – over eur 20 billion per year – to “ green ” projects. second, under the aegis of the united nations, projects were launched such as the unep finance initiative, a partnership between the united nations environment programme and 200 financial sector institutions, which make environmental sustainability a collective responsibility, share best practices and establish principles for green financing. thanks to the montreal climate change protocol, or to the portfolio decarbonization coalition, signatory investors commit to measuring and disclosing the carbon footprint of their portfolios. the objective is ambitious : reduce investment in carbon - intensive projects by several hundred billion dollars. lastly, financial institutions are now making more direct commitments. french banks and insurance companies have recently announced that they have withdrawn their support for the coal industry and increased their financing of renewable energies. paris europlace called for the creation of an energy transition fund, which would be invested in by french banks, insurers and asset management companies, and which could in turn invest eur 10 billion by 2020, with a view to financing projects to improve energy efficiency or promote renewable energies. this is a commendable initiative. ii / to best align these private initiatives with the fight against global warming, which is a public good, public intervention is nevertheless necessary. for central banks or prudential authorities, three questions arise : that of financing – and interaction with monetary policy –, that of information – and of disclosure –, and lastly that of time horizons – and stress tests –. 1. the question of financing : what interaction with monetary policy? climate change is likely to affect the price of goods and services. it has a direct impact on food prices

of costs in terms of higher real macroeconomic volatility. quite on the contrary, the volatility of real variables has declined relative to the averages observed during the 1980s and 1990s. does one size fit all? it is often argued that a single monetary policy combined with inflation differentials leads to different real interest rates across countries, which in turn may destabilisize the currency union by creating divergence in output growth that exacerbate inflation differentials. this is by no way what we have observed : first, inflation dispersion among the euro area countries ( measured as the unweighted standard deviation of annual hicp inflation rates ) amounted to slightly less than 1 percentage point in 2005 compared to around 6 percentage points in the 1990 ’ s. since the inception of the euro, the average inflation dispersion across the euro area countries has been around 1 percentage point. this figure is very close to the dispersion observed across the 14 us metropolitan statistical areas. concerning growth differentials, euro area averages naturally mask a variety of growth performances of individual countries within the single currency area, especially in a context where structural convergence has not been completed yet. growth dispersion is a natural phenomenon in any large economic area. looking at the main trend, the degree of dispersion in real gdp growth rates across the 12 euro area countries declined somewhat in 2004 ( in annual average terms ) to a historically low level ( 1. 4 % as measured by the unweighted standard deviation ), while it had been fluctuating around 2 % since the 1970s. by comparison, the dispersion of real growth rates across the eight us statistical regions fluctuated around an average of 1. 5 % between 1990 and 2002. this is not surprising since some stabilisation channels are at work in a currency area : in particular, a credible monetary policy should bring about a convergence of expected inflation towards the definition of price stability, leading progressively to the convergence of ex ante real rates across the area ; moreover, lower inflation relative to other trading partners increases price competitiveness, which in turn counteracts the initial effect of higher real interest rates. 3. appropriateness of the monetary policy stance has the monetary policy stance been appropriate? to try answering that delicate question, the literature of central bank watchers or observers has mainly focused on taylor - type rules as a usual benchmark. despite numerous caveats, such an approach can be very informative as it addresses several relevant issues such as