improve our modelling of the impact of extreme weather events on output and inflation in the near term and on our longer - term estimates of potential output. advising the results of that analysis help to steer our own internal deliberations, and our approach to 1 / 3 bis central bankers'speeches policy. we have issued a guide of our supervisory expectations of how banks should manage and disclose these risks. but a substantial majority are not meeting those expectations : the banks themselves find that 90 % of reported practices only partially meet our requirements, or do not do so at all. just 20 % of banks have a systematic way of assessing climate risks, yet almost all those that do have found climate risks to be already, or in the near future, having a material impact on their risk profile. we continue to advocate in european and international fora for the important pre - conditions of the green transition : 1. an effective carbon price that reflects the true social cost, 2. greater – and better – climate disclosures, and 3. the completion of the eu capital markets union. indeed, to deter greenwashing, it is vital that disclosure data are complete, internationally consistent and auditable. and the euro has taken the lead as the currency of choice for green bond issuance, and that can help catalyse further development of euro area capital markets provided the right regulatory conditions are put in place. we also aim to disseminate our analysis to enrich the wider policy debate and spread awareness of the potential impact of climate change, including through our involvement with the network for greening the financial system. the ecb is committed to contributing to the climate training alliance, which aims to enhance the training resources that are available to national financial authorities. acting and that leads me to my final point today. building on our analysis, the ecb will act within its mandate to contribute to mitigating and averting climate change. the eurosystem has already laid the foundations in several areas. it has agreed on a common stance for applying sustainable and responsible investment principles for some non - monetary policy portfolios, and since january we have been accepting certain sustainability - linked bonds as collateral and as part of our asset purchase programmes. following the conclusion of the strategy review, the ecb ’ s governing council has committed to further including climate considerations into our policy operations. let me mention a few examples : we will develop new experimental indicators, covering relevant green financial instruments and the carbon footprint of financial institutions, as well as their exposure

- standard monetary policy instruments, such as the purchase of government bonds, is well known. however, the world keeps on turning and the debate moves on. the situation seems to be improving in the euro area. consumer confidence in december was at its highest for 18 months. unemployment is at a seven - year low. a broad - based recovery is under way – across countries and sectors. at the same time, inflation in the euro area rose significantly – from 0. 6 % in november to 1. 1 % in december. in germany inflation even stood at 1. 7 % in december. and unsurprisingly, some are calling for the ecb to put a quick end to its loose monetary policy. in terms of the desired level of inflation, it ’ s been a long, cold winter. we are now seeing the first ray of sunshine – that ’ s good. is this ray already having a warming effect and does it herald the spring? is inflation really back? perhaps one or two more rays of sunshine are needed ; they ’ ll bring a bit more warmth. higher inflation is currently being driven mainly by energy prices and they could well have only a temporary effect. what ’ s more important here is underlying inflation, from which the very volatile energy and food prices are excluded. and underlying inflation in december was just 0. 9 %, after 0. 8 % in november. this rise was largely due to the fact that package holidays became more expensive in germany. however, this does not tell us much as the prices of package holidays are always fluctuating. does this mean we still have to wait a long time before exiting accommodative monetary policy? 2 / 5 bis central bankers'speeches in my view it doesn ’ t mean waiting until the last doubt about the return of inflation has been dispelled. it is rather a matter of not risking a reaction to a temporary inflation spike – which then might lead to longer, exceptional monetary policy measures. all preconditions for a stable rise in inflation exist. i am thus optimistic that we can soon turn to the question of an exit. that ’ s why we need to be ready to act when the time comes. for loose monetary policy is like a strong medicine for someone who ’ s very sick. it works, no doubt, but it also has side effects – and some of the unconventional measures have stronger side effects than others. and while the intended benefits of these measures wear off over time, the side