scenario data. the global output loss is calculated as the difference between the projected gdp level in a scenario where current policies continue and a scenario where policy action is taken to move to net zero 2050. it is calculated as the average of outcomes of the models remind, messageix - globiom and gcam, expressed in 2022 prices using a world bank series for the global gdp deflator. 3 / 4 bis - central bankers'speeches 5 estimates using euro area gdp for 2023 from the imf world economic outlook database as of april 2024, rebased to 2022 prices using the euro area gdp deflator, resulting in a value of us $ 14. 7 trillion in 2022 prices. 6 network for greening the financial system : transition plan package, april 2024. 4 / 4 bis - central bankers'speeches

provided to creditors – especially retail ones. all this, in a world of asymmetric information, can indeed be a source of serious liquidity risk and financial instability. the specific nature of the banking sector and the objective of financial stability should also be treated in a more structured way in the european commission ’ s approach to competition and state aid. adopted in 2013 – and based on the unfortunately premature conviction that the difficulties of european banks had by then been dealt with – the current approach greatly limits government intervention to support banks that are fundamentally viable in order to remedy market failures or negative externalities that are not originated by managerial shortcomings. indeed, according to the brrd, any public intervention that counts as state aid ( and is not among the very few exceptions allowed by the directive ) automatically triggers the resolution procedure. this, in turn, determines an overlap and, as a result, the prevalence of competition and state aid policy objectives over the objective of safeguarding financial stability. in other words, sufficient account is not taken of the fact that financial stability is of vital importance to the real economy. * * * to conclude, in the financial sector there are certainly risks of moral hazard as well as abuses and frauds, which the authorities, including banking supervisors, must prevent as effectively as possible. but prevention is not always possible and in periods of poor macroeconomic conditions risks of malpractice inevitably rise. this is why we need an overall resilient system, with banks well capitalised, better managed and more transparent, costumers with higher levels of financial education and authorities with severe sanctioning powers. this notwithstanding, we have learned that market failures are not infrequent, and information asymmetries and expectations ’ coordination problems may trigger sudden and possibly long waves of euphoria or panic. it is by now clear that markets are not always self - equilibrating and when they fail the consequences may be rather serious. on the other hand, markets should operate as much as possible without their force being bridled. there is no foolproof formula for striking this balance. clear rules, impartially applied, are essential, but so is the ability to make sound and timely decisions in the light of circumstances. in the case of banks, this calls for the possibility to recur to public backstops, and in a union like ours also a supranational one, in the presence of systemic risks and risks of contagion. this is