for all other sources of risk that we supervise. an approach that will be here to stay. our interactions with the banks we supervise show that they are also making progress, and they have finally started to put in place the basic infrastructure needed to identify, monitor, assess and control climate - related and environmental risks. 1 / 2 bis - central bankers'speeches all progress should be celebrated. for the banks under our supervision, we are contributing to this by proactively sharing the good practices we see. but let me be clear that all progress is ultimately a means to an end. and that end can be one thing only : practices and policies that are fully aligned with a paris - compatible transition path. this is why, when taking the first set of climate - related actions in our monetary policy, we committed to regularly reviewing all the relevant measures to ensure that they continue to support the decarbonisation path to reach the goals of the paris agreement and the eu's climate neutrality objectives. this is also why last week ecb banking supervision communicated deadlines by which we expect banks'risk management strategies to be fully aligned with our supervisory expectations in the area of climaterelated and environmental risks. this is why, despite the progress we have seen, i will continue to stress that the banks under our supervision need to step up their game and truly manage climate - related and environmental risks in the same way we expect them to manage any other material risk. this is why we support the european commission's proposal that banks should be legally required to put in place prudential transition plans which enable them to assess their risk exposures and the effectiveness of their risk controls in a world that is transitioning to net zero. this is why we ourselves will soon start to disclose data on climate risk exposure and the carbon footprint of our own asset portfolios, a commitment that covers all national central banks in the eurosystem. and this is why we urgently need to continue moving ahead. our road to sharm el - sheikh has been productive. but we cannot assess the success of our actions based on our point of departure. we need to judge our progress based on what is necessary to reach our destination in time. and we unfortunately cannot say that we are ahead of schedule. droughts, floods, heatwaves, and biodiversity loss are undeniably on the rise as very real manifestations of the climate and environmental crises. at the same time, in the eu, we are seeing that governments are all

ignazio visco : key issues for the success of macroprudential policies speech by mr ignazio visco, deputy director general of the bank of italy, at the bank of korea – bank for international settlements ( bok - bis ) conference on macroprudential regulation and policy, seoul, 18 january 2011. * * * i would like to thank paolo angelini and sergio nicoletti altimari for highly useful discussions and assistance. 1. macroprudential objectives and tools while the objectives of monetary and fiscal policies are clearly defined, and often precisely quantified, the situation is less clear in the case of financial stability. a broad consensus has emerged on the idea that “ macroprudential ” policies directed to preserving financial stability should limit systemic risk by addressing both the cross - sectional dimension of the financial system, with the aim of strengthening its resilience to adverse real or financial shocks, and its temporal dimension, to contain the accumulation of risk over the business or financial cycle. the first dimension seems to me to be of paramount importance. the second dimension emphasizes the need to contain the pro - cyclicality of the financial system, i. e. to “ lean against the financial cycle ”. 1 other authors argue that policy should be assigned more specific objectives, such as combating fire sales and credit crunches. 2 a key problem is that, whether a broad or a specific mandate is chosen, we are still far from an operational definition of these objectives. we do have an ample array of indicators and early warning signals, but we still lack a coherent framework to interpret them, to assess the need for macroprudential intervention, and to measure the success of the policies adopted. while the notion implicit in all definitions of macroprudential objectives is that what warrants a macroprudential regulatory intervention is systemic risk ( a negative externality ), systemic risk presents a number of challenges to the policymaker. first, it is hard to measure, because of its various dimensions : pro - cyclicality ; network or contagion risk – the spillover effects of a single institution ’ s distress on the rest of the financial system ; correlation risk, which reflects the common exposures of all financial institutions to the same risk factors ; concentration risk, due to the presence of a few dominant institutions in key financial markets and activities. second, systemic risk may be extremely difficult to spot ex ante. for instance, in the late 1990s the hedge fund industry