central bankers ’ speeches banking sector requires the active engagement of bankers and their stakeholders. regulatory and supervisory reforms are necessary, but not sufficient to restore people ’ s trust in banks. my view is that, while regulatory reform and supervisory action were certainly necessary to lay the foundations on which banks can restore trust, regulators and supervisors are not the key players in this process. the main effort to regain trust must come from bankers, in particular from banks ’ management and their boards as the tone from the top as well as the accountability of banks ’ top management are key for risk culture and staff ’ s behaviour. without their active effort, society will not start to trust again. the necessary process will be laborious and time - consuming ; and it will not be one measure or action that does the job, but rather a complex mixture of governance, risk appetite, risk culture and behaviour from the top. the role of banks and their stakeholders in restoring trust so what must bankers do to rebuild trust? first, bank ’ s management should develop viable business models with a clear long - term perspective. many of the recent crises have been the consequence of banks targeting high, but risky, short - term gains rather than pursuing lower, but more stable, long - term returns. banks should refocus on their core functions : • providing valuable investment opportunities to savers, while shielding them from liquidity risk, and • providing funds to those who need them, while assessing and monitoring their creditworthiness. financial intermediation is not simply a way to garner revenues ; it also supports economic growth and thus, ultimately, provides an important service to society. significant changes in the economic environment in recent decades have diverted banks from these core functions. it seems that the combination of an increased range of investment opportunities and funding sources, a trend towards more liberal regulation, and an increasingly competitive environment caused banks to reshuffle their priorities towards maximising short - term corporate and often also personal gain. the change in banks ’ business models from “ originate to hold ” to “ originate to repackage and sell ”, which was the proverbial spark in the tinder box that set off the financial crisis, can be seen as a prime example of losing sight of the goal of maximising long - term value. second, a bank ’ s management and board must have a sense of responsibility for developing the bank ’ s individual risk culture, thus enabling it to deal with risk in a way that supports this long - term business perspective and

than to be sorry in banking supervision, especially in the current uncertain macroeconomic circumstances. 3 - and underlying currents are firming moreover – while the macroeconomic tides may have changed, many of the structural challenges facing banks have not. indeed, the underlying currents which banks were already affected by last year, are still very much present. in fact, important currents have even firmed with the change in tides. this becomes very clear if we look at the consequences of the ongoing climate and environmental crises. another year has passed, and we have further confirmation – not that any was needed – that heatwaves, floods, droughts and environmental degradation are on the rise. the low water levels in the rhine this summer – for decades a moniker for a successful social economic model that has inspired the very objectives of the european union – show how traditional sources of economic welfare are being upended by the climate crisis. 2 / 5 bis - central bankers'speeches at the same time, russia's terrible war against ukraine has hardened the eu's determination to make progress with the energy transition. it's true that, in the very near term, the energy crisis will lead to an increase in the use of non - gas fossil fuels. nevertheless, the likelihood of a transition towards a low - carbon economy consistent with the eu's commitment to reaching net - zero by 2050 has increased. the main message from this should be clear. and it's identical to what i had in my notes for last year, though i will express it even more forcefully today. climate - related and environmental risks are a source of financial risk. even if the exact outcome is uncertain, a combination of physical and transition risks from the ongoing crises will materialise. and with global temperature increases drawing ever closer to 1. 5 degrees above pre - industrial levels, and the world being on track for a 2. 8 - degree increase by the end of the century, these risks are increasingly likely to materialise in a disruptive fashion. we need banks to manage these risks, in line with the expectations for sound risk management practices that we have published in a supervisory guide in 2020. 4 two weeks ago, we published the results of a thematic review of how banks manage climate - related and environmental risks. 5 this is the first time that our core banking supervision teams – the joint supervisory teams – have thoroughly assessed banks'risk management practices in this area. their findings show that, even though banks are starting to manage these risks by