“ reflections — temperature stress and the direct impact of climate change : a review of an emerging literature ”, review of environmental economics and policy, vol. 10, no 2, university of chicago press. 21. see mongelli, f. p., pointner, w. and van den end, j. w. ( 2022 ), “ the effects of climate change on the natural rate of interest : a critical survey ”, working paper series, no 2744, ecb. 22. panetta, f. ( 2021 ), “ sustainable finance : transforming finance to finance the transformation ”, speech at the 50th anniversary of the associazione italiana per l ’ analisi finanziaria, 25 january. 23. see f. elderson ( 2023 ), “ monetary policy in the climate and nature crises : preserving a ‘ stabilitatskultur ’ ”, speech at the bertelsmann stiftung, 22 november. 24. recent analysis has shown that, while restrictive monetary policy generally tightens financing conditions and slows investment for all firms – including investments aimed at reducing carbon emissions – monetary policy tightening does not tend to imply a worsening in lending conditions for green firms relative to nongreen firms. see altavilla, c. et al ( 2023 ), “ climate risk, bank lending and monetary policy ”, discussion paper, no 18541, cepr, 20 october. 25. the ecb ’ s survey on the access to finance of enterprises ( safe ) confirms that more than half of firms in the euro area see high interest rates as an impediment to future investment in the green transition. for further information on the answers to the ad - hoc questions on green investment and financing in the safe, please see ferrando, a., groß, j. and rariga, j. ( 2023 ), “ climate change and euro area firms ’ green investment and financing ‒ results from the safe ”, economic bulletin, issue 6, ecb, 2023. 26. see “ ecb presents action plan to include climate change considerations in its monetary policy strategy ”, press release, ecb, 8 july 2021. 27. the tilting was strengthened when partial reinvestment of maturing securities started in march 2023. see “ monetary policy decisions ”, press release, ecb, 2 february 2023. 28. see “ ecb reviews its risk control framework for credit operations

reasons for this : ( 1 ) changes in the economic structure which have resulted in a greater weight on less volatile components of demand such as consumption of services ; ( 2 ) smaller fluctuations in the inventory cycle due to improved inventory management by firms ; and ( 3 ) increased central bank credibility and the resulting stability of inflation expectations which have allowed central banks to avoid substantial tightenings of monetary policy that cause sharp economic downturns. in japan, however, troughs in the two post - 1990 recessions have been extremely deep. while these three factors have operated to some extent, excesses in production capacity, holdings of labor, and debts, along with the corresponding weakness in the financial system, have combined to place strong downward pressure on the economy. structural adjustment has progressed considerably in the current recovery phase. as mentioned earlier, corporate profits are likely to exceed not only the peaks recorded during the past two economic recovery phases but also that recorded during the bubble period. since firms'success in dealing with their structural problems is reflected in their profitability, firms are judged to be approaching the end of a prolonged adjustment phase. in this situation, the pace of decline in land prices, which was substantial, has started to slow. while land prices have continued to plunge in regional areas, specific parts of some metropolitan areas have experienced surging prices. land price developments such as these, as well as the factors causing them, require monitoring. turning to the financial system, considerable progress has been made toward restoring the system to soundness, particularly in dealing with the nonperforming - loan problem. financial institutions have therefore been less concerned about the availability of liquidity. under these circumstances, financial institutions have become less inclined to increase their current account balances at the bank - a phenomenon reflected in undersubscription during the bank's funds - supplying operations. financial institutions are expected to continue further improving their business performance even after the full removal of blanket deposit insurance in april, as this will contribute both to the soundness and to the further revitalization of the financial system. the stronger the financial system, the easier it is for a virtuous cycle to operate, whereby improved profits and ongoing structural adjustment keep driving firms to even greater heights of activity. economic fluctuations in japan are also expected to exhibit less volatility, coming into line with the trend in other major industrialized countries. the economic environment in which japan finds itself is basically robust : factors such as inventories, which can cause imbalances