the car industry is a central issue. and, of course, the future of the car industry is deeply interconnected to where we ’ re going to be in terms of regulatory policy, carbon taxation, the preferences of consumers – many factors which are centrally driven by the carbon transition already are central to monetary policy. i think that ’ s only going in one direction. it ’ s very difficult to overstate, in the 3 / 5 bis central bankers'speeches last two years, the speed at which the world ’ s central banks, both as monetary policymakers and as regulators, have invested in dealing with the carbon transition. the implications for monetary policy are quite straightforward. at one level, there are many opportunities. in fact, i was in various meetings in the last few weeks where the dominant driver of investment for many firms right now is adapting their firm to deal with the climate challenge. so at one level, it ’ s a driver of investment. at another level, uncertainty about : how quickly will carbon prices go up? what exactly will be the nature of regulatory restrictions to encourage the transition? that uncertainty is not helpful, so the more there are clear, comprehensive and vigorous climate change policies, i think the better for the transition. does anyone have a question for philip? we do have one at the front. please wait for the mic to come to you. just your name and the company you represent, and a very quick question, please. audience member : i wanted to ask a similar question to the question that ’ s already been asked about interest rates. you will be aware, of course, that with the lowering of interest rates into negative interest rates it ’ s a real squeeze on interest rate margins for banks, to the point that many euro banks and non - euro banks are charging customers to be able to hold their deposits in euros. banks are being charged to hold liquidity at the ecb. now, i was also trained as an economist and in my lifetime, that was a very unusual experience to have to pay someone to hold money with them. i do not know if there is a nice way of asking, but i ’ d be really interested to know where you see the trend going over the next 12, 18 months. i actually think it ’ s unsustainable at its current trend. i think it ’ s a fascinating question, which is very important that we put into context, so when we set monetary policy it ’ s for the whole economy. now

, banks are a central part of the transmission channel so we absolutely do care about how banks are adjusting to this. but let ’ s start at the most basic issue. underneath our interest rate policy decision is, again, many people here will be familiar with the concept of the real interest rate, the inflation - adjusted rate, which is determined by the intersection of savings and investment. when you think at a global perspective or a european perspective, the driver of why interest rates are so low is a mix of low investment activity and a high preference for savings because of demographics – and also, by the way, risk aversion. there is also a high preference of finding so - called “ safe assets ”. and so the challenge for us is : many estimates of this real interest rate are close to zero or negative, either globally or for the european economy. essentially, what that means is, if we raised rates above the level consistent with that real rate, that would be contractionary for the european economy. so we have this paradox of : it ’ s unprecedented, but it ’ s also the case – and the inflation numbers tell you – it ’ s not particularly a super loose policy. if it was super loose inflation would be higher. and this is the big question for the financial sector. the first point i would make is, our forecasts do say there will be recovery. we do say, even though inflation is around 1 now, we assess by 2021 it ’ ll be 1. 5 which would be closer towards the target. the money markets do anticipate there will be some reversal in the interest rate path, so i think that ’ s a good baseline. on the other hand, i do think everyone here involved in the financial sector – and more generally those involved in government policy for pensions, insurance – have to recognise, how do we live in a world where sometimes it ’ s going to be the case the policy rate we set will go negative? i think there is an adaptation of expectations. we are seeing, it ’ s very interesting in the banking world, right now about a quarter of european deposits to corporates are being charged at a negative rate. what ’ s interesting, we see, is, those corporates who were charged a negative rate, rather than suffer that, they ’ re doing more capex. our transmission is supported, so it ’ s a nuanced view. as you know, we brought in tiering to compensate banks who are