andras simor : on the road to the euro – good governance and effective partnership concluding remarks by mr andras simor, governor of magyar nemzeti bank ( the central bank of hungary ), at the conference “ on the road to the euro : good governance and effective partnership ”, budapest, 19 april 2007. * * * ladies and gentlemen, i should like to thank you for attending this conference, jointly organised by the ministry of finance and the mnb, and sharing with us your valuable thoughts on the forms and possibilities of co - operation between the government and the central bank on the road to the euro. i. the introduction of the euro is a joint enterprise for us. it is not merely a legal obligation we undertook in the treaty of accession but much more than that – a unique opportunity that may enable the hungarian economy to catch up more quickly and may ensure lasting economic and financial stability. however, we can only exploit the benefits of the common currency if we are well - prepared to enter the gate of eurozone. in these preparations important tasks that extend beyond fulfilling the nominal convergence criteria devolve upon both the government and the central bank. a. above all, the government must create a balanced budget that allows sufficient room for manoeuvre as a member of the eurozone to be able to reduce the fluctuations of growth in case of shocks to the economy. b. the central bank has to prepare players in the economy to exploit the benefits arising from price stability as well as possible. we need to learn that our income can only grow at the rate our productivity grows, and inflationary expectations must be anchored. ii. while we have to perform various tasks on the road to the euro, this is the common interest of the government, the central bank and all players in the economy, and so we have to we help and support each other. as it was emphasised in the speeches here today, the government and the central bank can co - operate most efficiently and achieve the best joint results if the tasks and the goal to be reached are defined precisely for both parties, but thereafter independence is guaranteed in using the instruments available to attain the set targets. iii. the central bank ’ s objectives in inflation targeting were jointly set by the government and the central bank, bearing in mind the government ’ s convergence programme. at the same time, as regards the way to reach the targets and achieve price stability as well as the instruments to do so there was no such una

##cc 13 – highlights the consequences of inaction today for the scale of reaction required tomorrow. these actions will be influenced by policy choices that are rightly the responsibility of elected governments, advised by scientific experts. in ten weeks representatives of 196 countries will gather in paris at the cop21 summit to consider the world ’ s response to climate change. it is governments who must choose whether, and how, to pursue that 2 degree world. and the role of finance? earlier this year, g20 finance ministers asked the financial stability board to consider how the financial sector could take account of the risks climate change poses to our financial system. as chair of the fsb i hosted a meeting last week where the private and public sectors discussed the current and prospective financial stability risks from climate change and what might be done to mitigate them. i want to share some thoughts on the way forward after providing some context beginning with lessons from the insurance sector. few business leaders list climate change as a near - term pressing risk. see, for instance, pwc ’ s annual survey of ceos ( www. pwc. com / gx / en / ceo - agenda / ceo - survey. html ) and the bank of england ’ s systemic risk survey ( www. bankofengland. co. uk / publications / documents / other / srs / srs2015h1. pdf ). even credit ratings typically only look out to 3 - 5 years. for instance, ipcc ( 2014 ) conclusion spm 2. 1 notes that “ cumulative emissions of co2 largely determine global mean surface warming by the late 21st century and beyond ”. the stern review observes that “ many greenhouse gases, including carbon dioxide, stay in the atmosphere for more than a century ” ( see the stern review of the economic effects of climate change ( 2006 ) ). the cancun agreement in 2010 committed governments to “ hold the increase in global average temperature below two degrees ”. discussion of this level has been attributed to nordhaus ( 1975 ). others, including the unep advisory group on greenhouse gasses ( 1990 ) have suggested that two degrees could be a point beyond which the damage caused by climate change may become non - linear. see ipcc ( 2014 ). bis central bankers ’ speeches climate change and financial stability there are three broad channels through which climate change can affect financial stability : – first, physical risks : the impacts today on insurance liabilities and the value of financial assets that arise from climate - and