of price stability as enshrined by the treaties. this has two important implications for the conduct of monetary policy. first, our climate - related actions must not impede the smooth functioning of monetary policy. for example, a focus on bonds with low emission intensity may unduly reduce the amount of purchasable assets and hence constrain the implementation of the appropriate monetary policy stance. however, this is merely a transition problem. central banks can play an important catalyst role in speeding up the green transition and in supporting the development of the “ green ” market segment. [ 20 ] one example is the recently announced acceptance of sustainability - linked bonds as collateral and for outright asset purchases, which may foster the issuance of such asset classes. by pre - announcing planned measures well in advance, central banks enhance incentives for timely action on the side of market participants to adjust to the new measures. second, the precedence of price stability over other objectives implies that if monetary policy needs to be tightened to achieve our price stability objective for reasons unrelated to climate change – for example, because of underlying price pressures – then we must not hesitate to act. climate change is, and will remain, only one among many factors shaping the inflation outlook relevant for monetary policy. while a reorientation of our policies in line with the political priorities set by european decision - makers seems necessary, this must not question our commitment to price stability, which will at times mean that we have to stop purchasing green bonds, thereby defying the threat of “ green dominance ”. strict adherence to our primary mandate is crucial in order to safeguard the legitimacy of our actions as an independent institution. conclusion let me conclude. there can be no doubt that climate change requires urgent policy action. as part of a broad - based societal endeavour to combat climate change, the ecb has an obligation to consider how it can contribute to this collective effort within the limitations imposed by the treaties. one possible avenue for action is to incorporate sustainability criteria into the implementation of our private sector asset purchases. in light of the observed emission bias in our corporate bond portfolio, we need to carefully re - assess the current notion of market neutrality. in its current interpretation, it appears to hamper an efficient allocation of resources as it does not reflect the significant externalities that climate change exerts on society. at the same time, it has to be acknowledged that central bank policy cannot, and must not, replace government policies. monetary policy actions vary over the business cycle,

while the effective mitigation of climate change requires permanent and structural measures, which only governments can provide. thank you for your attention. annexes 3 march 2021 slides english 1. i would like to thank melina papoutsi for her contributions to this speech. ”, 29 september. 3. see ecb and esrb ( 2020 ), “ ”, june. 2. see carney, m. ( 2015 ), “ breaking the tragedy of the horizon – climate change and financial stability positively green : measuring climate change risks to financial stability 4. see lagarde, c. ( 2021 ), “ climate change and central banking ”, 25 january. 5. see schnabel, i. ( 2020 ), “ never waste a crisis : covid - 19, climate change and monetary policy ”, 17 july. 6. see elderson, f. ( 2021 ), “ greening monetary policy ”, the ecb blog, 13 february. 7. ”, economics of disasters and climate change, vol. 2, no. 1, pp. 21 – see parker, m. ( 2018 ), “ the impact of disasters on inflation 48 ; ecb and esrb, ( 2020, ibid. ). 8. the challenge goes beyond climate change. other aspects of environmental protection, in particular the preservation of biodiversity, are equally important. ( tfeu ). 10. when the eurosystem launched its public sector purchase 9. see art. 127 ( 1 ), treaty on the functioning of the european union programme ( pspp ), benoit cœure referred to the concept of market neutrality for the first time. “ the concept of market neutrality means that, while we do want to affect prices, we do not want to suppress the price discovery mechanism. we will operationalise this principle by ensuring a high degree of transparency around our interventions and by closely monitoring their impact on liquidity and collateral availability. ” see cœure, b. ( 2015 ), “ embarking on public sector asset purchases ”, 10 march. 11. see schnabel, i. ( 2020 ), “ when markets fail – the need for collective action in tackling climate change ”, 28 september. 12. see, for example, the recent speeches by francois villeroy de galhau and klaas knot. villeroy de galhau, f. ( 2021 ), “ the role of central banks in the greening of