by a dedicated committee, most of whose members are independent directors and bring the appropriate level of knowledge and experience of c & e risks. another good practice can be seen in the use of transition planning tools aimed at managing the risks of the transition. this involves using scientific pathways to assess the alignment of banks ’ portfolios with the paris agreement and designing clear and actionable plans to address observed misalignments. with these good practices, banks now have access to very practical suggestions on how to accelerate progress. knowing that no “ one - size - fits - all ” approach exists, let me assure you that, as part of the ongoing supervisory dialogue, our supervisory teams are there to discuss specific implementation challenges with each bank finally, i would like to stress that we will closely monitor banks ’ progress with respect to the deadlines, and, if necessary, we will use all measures in our toolkit to ensure compliance with our expectations. these include imposing periodic penalty payments and setting pillar 2 capital requirements as part of the annual supervisory review and evaluation process. conclusion let me conclude. over the last couple of years, a global consensus has emerged among regulators, supervisors and banks around the need to tackle the financial risks stemming from ongoing climate and environmental crises. as underlined by the latest worrisome observations from last week ’ s ipcc report, it is both highly urgent and vitally important for banks to be able to identify and manage c & e risks. 2023 is a crucial year for translating ambitions into sound internal practices, for which substantial progress is needed. i hope i can count on your full commitment so that by the end of 2024 we can conclude that banks are “ managing climate - related risks as a priority ”, as articulated by one of your peers that signed the net - zero banking alliance. this would, of course, not be the end of the journey, as c & e risks, like any other mainstream risk, demand continuous attention and adaptation. but it would be a crucial step to making the banking system resilient to the twin climate and environmental crises, an urgent and vitally important imperative if ever there was one. 1. ecb banking supervision ( 2020 ), “ guide on climate - related and environmental risks ”, november. 2. elderson, f. ( 2022 ), “ towards an immersive supervisory approach to the management of climate - related and environmental risks in the banking sector ”, keynote speech at the industry outreach on the thematic review on climate

target midpoint as of next year and over the projection horizon. such inflation movements will be under the biggest impact of the effects of past monetary tightening and receding inflation expectations, as well as the loosening global cost - push pressures, the continued slowdown in imported inflation and the still subdued external demand. short - term inflation expectations of the financial and corporate sectors decreased significantly in the past year, and financial sector ’ s expectations returned within the target bounds at the start of the year. according to the results of bloomberg ’ s april survey, they are almost on the target midpoint and measure 3. 1 %. such movements are helping push inflationary pressures further down, and at the same time speak in favour of enhanced credibility of our monetary policy. the downward inflation trajectory and the expected movements of its key factors in the domestic and international environment are pressing the question of when we should start with monetary accommodation, to what extent and at what pace. our stance was to adhere to the principle of cautiousness so as not to rush into premature monetary policy relaxation. our decision to keep our key policy rate unchanged at 6. 5 % was dictated by the still elevated – though receding – global inflationary pressures and the persistent and significant uncertainty in terms of movements in global energy and other primary commodities prices. 3 of 10 chart 6 changes in money market interest rates from october 2021 to july 2023 chart 7 interest rate movements ( monthly average, in % ) ( in bp ) key policy rate interest rates on new dinar household loans interest rates on new dinar corporate loans belibor 3m belibor 6m increase from april 2022 to july 2023 increase from october 2021 to april 2022 nbs key average policy rate repo rate beonia belibor belibor belibor 1w 3m 6m source : nbs. source : nbs. when making the decision, we took into account the fact that the effects of past monetary tightening have been greatly reflected on the cost and scope of private sector borrowing. i would like to recall that the analysis we presented in one of our text boxes confirms the efficiency of the monetary policy transmission mechanism through the interest, credit and expectation channels. as the key policy rate was kept unchanged for the past months, interest rates in the interbank money market have stabilised, resulting in almost unchanged prices of dinar loans in the period since the prior report. corporate and household lending remained low in q1 this year as well, reflecting the effects