and the actions to be taken in the period following the crisis. the increased vulnerability of the government ’ s financial position due to the increase in government debt has not been very visible so far. on the one hand, the ecb ’ s expansionary monetary policy is helping to keep government debt financing costs very low. moreover, the demand for government debt is high, given the chronic savings surplus at global level. on the other hand, the new instruments at european level are also helping to finance the costs of the crisis through various channels. in an environment of structurally low interest rates, like the one we are in at the moment, the adverse effects of very high levels of government debt are less visible in the short run. indeed, the fact that interest rates are lower than nominal growth rates increases the possibilities of expanding government debt before it begins to rise exponentially, but there is a risk that the differential between nominal interest rates and the nominal gdp growth rate will at some point cease to be negative, in which case the unfavourable effect on the dynamics of the government debt ratio will be all the greater the higher the level of debt. in any event, the evidence regarding the adverse effects of running high levels of government debt is abundant. high government debt tends to lead to a decline in the financing available for private spending, as well as an increase in its cost, ultimately hampering the accumulation of private capital and hindering economic growth. high levels of debt, moreover, increase the likelihood of episodes of financial vulnerability, as in the global financial crisis and the sovereign debt crisis when rising funding costs and falling volumes reached extreme levels. finally, the greater the level of government debt, the less the scope for fiscal policy to respond to the downturns that may arise in the future. during the sovereign debt crisis, all these effects were apparent. in 2012 there was a positive relationship between the cost of financing for each member state and its level of debt two years later, as an approximation of the fiscal position expected by the market. the crosscountry correlation between the cost of sovereign debt and the cost of lending to nonfinancial corporations was also positive. these reasons underline the importance of preparing without delay a detailed plan to progressively reduce the budget deficit. the strategy designed could be applied when the impact of the pandemic on the economy has been overcome and, more importantly, could be announced in advance, as this would very usefully anchor the credibility of economic policy in this country

forward to hearing lord stern ’ s speech. but first, let me say a few more words about the implications that the transition to a low - carbon economy has for the financial sector, and the kind of actions that supervisors and central banks are taking to address this global challenge. by definition, this kind of transition involves structural economic changes that affect practically all economic sectors and activities ; the investments required to achieve this transformation of the economy are huge and demand a significant mobilisation of financial resources. the transition to a low - carbon economy affects the financial sector in two ways. first, because of the financial risks that climate change and the transition to a low - carbon economy entail. second, due to its role in channeling the funding needed to carry out the large investments required to comply with the paris agreement. obviously, this transition involves both challenges and opportunities for the financial sector. in terms of opportunities, it is clear that the activity of banks in relation to green finance is growing forcefully. financial institutions are actively issuing green bonds or syndicated loans related to sustainable finance. in addition, banks are increasingly offering other types of services to their clients. according to the risk assessment questionnaire carried out by the eba ( european banking authority ) in june 2019, 90 % of the banks responding to the questionnaire have developed or plan to develop green products and / or services based on environmental considerations, of which the most popular products would be energy - efficient mortgage loans, followed by commercial real estate loans and green car loans. 6 although in recent years there has been progress in the development of new products, with green bonds the most developed green financing instrument, the scale of the investment challenge remains significant. according to the european commission7, to achieve the eu's eba ( 2019 ). https : / / eba. europa. eu / sites / default / documents / files / documents / 10180 / 2854739 / 916f8c4b - 7099 - 4abaac1f - 882cfd4c3583 / raq % 20booklet % 20spring % 202019. pdf? retry = 1 https : / / ec. europa. eu / info / business - economy - euro / banking - and - finance / green - finance _ en 3 / 5 2030 targets agreed in paris, including a 40 % cut in greenhouse gas emissions, we have to fill an investment gap estimated at 180 billion eur per year. the effects