insights on concentration risks into a practical instrument are on - going. one option that is being looked into is a quantitative concentration limit, either absolute or relative. this limit would then be subject to supervisory reporting, disclosure or an additional capital buffer. and in case of a breach of the limit, a range of supervisory measures could be considered, such as a mandatory notification in accordance with the large exposures framework or a deduction of the excess part of the concentrated position from the bank's capital. if this concentration limit were to become part of the prudential framework, it could well be phased in to give you, banks, time to make the necessary adjustments. i do want to stress, though, that our ideas on concentration limits are very much in the proposal phase. de nederlandsche bank is looking forward to comments on this proposal and to the results of any consultation rounds on the eba discussion paper. these could in turn help us to improve the proposal. so far, i have discussed climate and environmental changes as a source of prudential risks. however, some banks also consider these changes, and the related changing stakeholder preferences, as an opportunity to change their strategy and business model. for example, i find it promising to see that a number of banks are committing, 4 / 6 bis - central bankers'speeches themselves, to net - zero initiatives. such as the banks that choose to align with the paris agreement by signing the commitment statement of the net - zero banking alliance. institutions that have signed this statement have 18 months to do a number of things. they need to identify operational and attributable green house gas emissions from their lending and investment portfolios. and then they need to set specific targets, for both 2030 and 2050, so that they can align with the trajectories towards net - zero in 2050 or earlier. to achieve these targets, banks might need to adjust their business model and their range of products and services. or they may need to adjust their decision - making process and thus adapt their governance structure and risk management procedures. it is important that banks provide qualitative and quantitative disclosures to support their commitments. as mentioned earlier, the recent ecb assessment shows that banks do not fully meet ecb expectations on disclosure of c & e risks. and this is where the final risks i want to mention today, occur. reputational and litigation risks. these risks follow from an increased stakeholder awareness for a netzero society

christine lagarde : finding resilience in times of uncertainty speech by ms christine lagarde, president of the european central bank, at an event organised by the central bank of cyprus, nicosia, 30 march 2022. * * * constantine p. cavafy ’ s famous poem “ ithaca ” starts with the words : “ when you set out on your journey to ithaca, pray that the road is long, full of adventure, full of knowledge. ” and indeed, these words capture well the story of cyprus in modern times. it is a story full of adventure, with many obstacles along the way. and yet, your people have overcome them all, gaining in knowledge, and emerging stronger and more resilient each time. your nation rebounded after the invasion of 1974 and subsequent partition of the country, using its agility and acumen to become a hub for business in the middle east and north africa region. cyprus transformed itself from an island on europe ’ s easternmost edge to a member state at its core, joining the eu in 2004 and adopting the euro in 2008. it endured and then recovered from a crippling banking crisis in 2013, with the economy growing by around 6 % each year from 2015 until the start of the pandemic. more recently, cyprus has rallied well from the pandemic, despite the importance of tourism to the economy, which was heavily hit by lockdowns and travel bans. but europe is now faced with another crisis in the form of the russian invasion of ukraine. this is first and foremost a human tragedy whose cost is growing by the day. but it is also a significant economic shock, owing to our proximity to russia and our dependence on its gas and oil. that shock will be felt here in cyprus too. so i applaud your country for opposing this unjustified act of aggression together with the rest of europe. but i recognise that cyprus, like all of europe, is now confronted with rising uncertainty. in my remarks today, i would therefore like to review the economic situation in the euro area, touching on what we know so far about the impact of the war. and i would like to lay out how national and european policies can combine to help mitigate its costs and manage today ’ s uncertainty. the recovery from the pandemic before the russia - ukraine war began, the euro area economy was rebounding well from the pandemic. the recovery was much faster and more job - rich