in other parts, hitting the poorest and most vulnerable in our societies most severely. in this sense, the pandemic has been a warning shot with regard to the much greater challenge arising from climate change. in his famous speech, mark carney, then governor of the bank of england, has argued that “ the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors – imposing a cost on future generations that the current generation has no direct incentive to fix ”. moreover, studies have uncovered a significant lag in discerning the benefits of mitigation measures, which makes it much harder to impose costs on society today if measurable results are available much later. by making the costs of a major, truly global crisis more tangible, the pandemic may help to remove the “ tragedy ” from mark carney ’ s horizon : after covid - 19, the dramatic consequences of a global climate crisis may be much easier to imagine. and given the need for fundamental structural change after this crisis, the willingness to use this chance to take precautions against the even bigger risk of a climate crisis may have increased. in order to achieve the european union ’ s target of net - zero greenhouse gas emissions by 2050, our response to the growing risks of climate change has to start with the way we rebuild our economies after the pandemic. in my remarks this morning, i will argue that three complementary pillars are needed to accelerate the transition towards a low - carbon economy : an effective carbon price, a strong investment programme and a greener financial market. i will also argue that central banks have a role to play in mitigating climate - related risks, even within their traditional mandates, because global warming poses severe risks to price stability. carbon pricing as the central tool so let me start with the first pillar, the introduction of global carbon pricing. europe is already spearheading global efforts, which is essential at times when a global solution is not in sight. the eu ’ s emission trading system ( ets ) is the world ’ s largest carbon market. its “ cap and trade ” scheme provides a mechanism for both reducing the total amount of emissions in a cost - efficient way and ensuring that pollution is priced adequately. a recent study shows that the ets saved more than one billion tons of co2 between 2008 and 2016, a 3. 8 % reduction in total eu - wide emissions. and only this week, carbon prices hit their highest level in more than a

peter praet : interview in expansion interview with mr peter praet, member of the executive board of the european central bank, in expansion, conducted by mr daniel badia gonzalez and mr agustin monzon pena on 25 april 2016 and published on 29 april 2016. * * * after last week ’ s meeting, mario draghi repeated that interest rates cannot be cut indefinitely. are negative interest rates close to their limit? since negative rates were introduced in 2014, they have been very effective. so far, the positive effect of an improvement in financial conditions outweighs any negative effects that may be associated with banks ’ earnings capacity or other financial stability risks. on the other hand, it ’ s clear that negative rates cannot be reduced indefinitely to ever lower levels. we have to monitor how the measure is being transmitted to the broader economy. in march we decided to focus more on the credit easing part of the long - term monetary policy strategy that we started in june 2014. we decided to launch a new series of targeted longerterm refinancing operations ( tltro ii ) where banks can borrow funds at rates that can be as low as – 0. 4 %, on the condition that they lend that money on to the real economy. this is a way to ensure that the easing impact of the negative rates doesn ’ t stay within the interbank money market circuit, but reaches the broad economy. having said this, interest rates remain part of a broader toolbox. but deploying negative rates again in the future would require a distinct worsening of the inflation outlook. as mario draghi himself said, i don ’ t think we ’ re going to see these conditions materialising in the near future. but the instrument is in the toolbox in case risks re - emerge. if the positives outweigh the negatives, why are negative rates coming in for such criticism? i think the banks that are complaining aren ’ t looking at the whole picture. they see the immediate loss associated with the tax on the cash they are holding with the ecb. they see the fall in unit margins if their loan book is indexed to low market rates. what they do not mention is that low interest rates are spurring more demand for loans, so they are able to expand their operations and collect more margins overall. they also don ’ t refer to the fact that, in a better economy, the quality of their loan book improves. spanish banks, for instance, have experienced a dramatic