associated with this incentive is socially divisive. from a socially optimal perspective, green investments may also be underfinanced if market participants make investment decisions based on excessively short horizons. moreover, scale, 3 / 6 bis central bankers'speeches liquidity and reliable benchmarks can considerably improve market functioning. public sector intervention at the creation of such markets can provide the right framework to help kick start private - sector involvement. the european investment bank issued the world ’ s first green bonds in 2007, listed at the luxembourg stock exchange. further issuance has provided volume to the market. today, more than 160 green bonds list on the luxse. certification and incentives are also in place, but the issue of international recognition is still unresolved. as a aaa - rated issuer, the eib helps provide a benchmark for calculating yield curves and spreads in the green bond market. the european commission ’ s work on standardised definitions, classifications and reporting requirements should help increase transparency, discourage “ green - washing ” and improve market pricing. these initiatives now appear to be bearing fruit, with the private sector issuing more green bonds in recent years. but while there may be a role for such public sector initiatives at the european level, the ecb ’ s narrow mandate curtails its ability to contribute – a fact that, i think, is not always well understood by our critics on the subject. there are two ways in which some people say that we could contribute : first, through our asset purchase programme ( app ) and second, through our role as banking supervisors. the treaty has granted us independence in choosing the best monetary policy instruments to use in fulfilling our mandate for price stability. but that independence is not a carte blanche to act arbitrarily. our use of monetary policy tools needs to be necessary, suitable and proportionate to achieving our aim, while respecting the principles of an open market economy with free competition. 16 going beyond these strict conditions would erode our legitimacy, which could in turn threaten our future independence and reduce our ability to achieve our mandate over the long term. so where do green bonds fit into the app? purchases and reinvestments under the app are temporary and are undertaken to preserve price stability. as such, purchases have to be calibrated to achieve the maximum impact on output and inflation, which means purchasing bonds issued by a wide range of economic sectors without distorting the relative asset prices. carbon - intensive sectors accounted for nearly half of the

and monetary policy transmission. this link we still have to better research. that public policies at international, but also national level are all intertwined. national policies – macroeconomic and fiscal policies – can have a systemic effect on the whole euro area. it took this crisis to really understand this. and the euro countries need to prove now that it can work, that we can make policies consistent and can recover trust and confidence. the euro countries took the necessary steps to pave the way put of the crisis. as a central bank we have made our contribution to overcome the deep recession we experienced only 2 years ago, contributing to bring back trust and confidence. now it ’ s time to address new challenges : first, governments have to work on regaining confidence, putting the necessary reforms in place second, the regulatory reform which is on its way has to be fully implemented and third, the unwinding of our non - standard monetary policy measures has to go forward as financial conditions improve, not least to prevent moral hazard and delay in the needed financial sector restructuring we should not forget that the european monetary union came a long way. the werner report 40 years ago, the establishment of the european monetary system 30 years ago, the delors report 20 years ago and finally the establishment of the european monetary union a bit more that 10 years ago. we must not undermine this great achievement. the serious currency turmoil and fluctuations in the 50 years preceding the european monetary union, notably the exchange rate shocks in the 1980s and the crisis at the beginning of the 90s should be a reminder how precious the current achievement of a monetary union is. like with financial integration, i believe that the european monetary union and more integration and consistency of public policies on a european level is a fact, a necessity and an irreversible process. what we need to ensure are sound and sustainable policies for an ongoing success. i thank you for your attention. bis central bankers ’ speeches