of europe by adding : “ il est remarquable que l ’ homme d ’ europe n ’ est pas defini par la race, ni par la langue, ni par les coutumes mais par les desirs et par l ’ amplitude de la volonte ( … ). “ in other words, “ it is remarkable that the people of europe are not defined by race, nor by language or customs, but by desires and breadth of will ( … ) ”. we can indeed imagine, like valery, the cultural identity of europe as being a remarkable expansion of the union, achieved under the roman empire, of greek thought, roman law and of the bible, which has given rise to three monotheistic religions. we could still go further in our search for europe ’ s conceptual heart. it is what husserl proposes in his famous vienna lecture of may 1935 entitled “ philosophy and the crisis of european humanity ”. he sees the origin of the spiritual idea of europe as being in greece, where a handful of men initiated a radical conversion of all cultural life in their own nation and among their neighbours. let me quote husserl in the original german version : “ es ist nun auch ersichtlich, dass von hier aus eine ubernationalitat vollig neuer art entspringen konnte. ich meine naturlich die geistige gestalt europas. es ist nicht mehr ein nebeneinander verschiedener nationen, die sich nur durch handel - und machtkampfe beeinflussen, sondern : es ist ein neuer geist, von philosophie und ihren sonderwissenschaften herstammend ; ein geist, freier kritik und normierung auf unendliche aufgaben hin, er durchherrscht das menschentum, schafft neue, unendliche ideale! ” i would translate this into english as follows : “ one can also see that it ’ s the starting point of a new kind of community, one which extends beyond nations. i am referring, of course, to europe in a spiritual form. it is now no longer a number of different nations living alongside each other and only influencing each other through commercial competition or power struggles, but it is : a new spirit – stemming from philosophy and the sciences based on

pressures even as energy price inflation has started to subside from uncomfortably high levels. to resolve today ’ s inflation problem, financing conditions will need to become restrictive. tighter financing conditions will slow growth in aggregate demand, which is needed to reduce the upward pressure on prices that has resulted from the long - lasting damage to the euro area ’ s production capacity inflicted by the energy crisis. by bringing aggregate supply and demand back into balance, we will accelerate the process by which inflation will fall back to our 2 % target and thereby ensure that longer - term inflation expectations remain anchored. third, the experience of the 1970s shows that a policy that is falsely calibrated on the assumption that inflation will decline by itself could ultimately put the green transition more fundamentally at risk. in this case, monetary policy would need to raise interest rates even more forcefully to restore trust in the economy ’ s nominal anchor. in the 1970s, financing conditions tightened to an extent that made capital accumulation prohibitively expensive. our current policy is calibrated to avoid such very bad outcomes. [ 11 ] a determined reaction to the risk that inflation may become entrenched not only safeguards price stability but also provides the conditions under which the green transition can thrive sustainably. indeed, while the cost of credit has become more expensive because of our actions, financing conditions remain favourable from a historical perspective. measures of real long - term interest rates, for example, which matter most for green investments, remain low in historical comparison ( slide 3 ). accordingly, a large majority of leading climate economists polled last year see only a mild or very mild impact of rising borrowing costs on the transition to net zero emissions by 2050. so far, there is also no evidence of funding shortages for green investment projects. while conventional bond and equity funds have experienced a sizeable decline in net inflows in 2022, the same was not true for environmental, social and governance ( esg ) funds ( slide 4, left - hand side ). esg equity funds have even seen sustained inflows. such portfolio rebalancing has made green investments relatively more attractive from a funding perspective. in the case of german government bonds, for example, the yield of a green bond compared with that of a conventional bond with similar characteristics has declined, implying that the “ greenium ” has reached record levels in absolute terms ( slide 4, right - hand side ). recent research also warns firms not to delay the transition as nominal interest rates rise. ecb staff