, such changes in inflation expectations are contained by the central bank's commitment to aggressive tightening to control inflation. indeed, since the 1980s, many countries have developed monetary policy frameworks with a view to stabilizing inflation expectations. inflation targeting, of course, is a typical example. however, there are many issues that need to be better understood regarding inflation expectations. for example, market participants, firms, and households all have different expectations formation, given different perceptions of current inflation. in addition, these expectations are susceptible to the influence of their experience or psychological conditions, as well as to the central bank's communication. moreover, there is no guarantee that the way they are formed will remain stable over time. there is still much room for further research in this area, including in relation to central bank communication. new challenges next, i would like to mention two new challenges. the first is about the changing inflation and economic environment. from a long - term perspective, many countries, 2 / 4 bis - central bankers'speeches including japan, typically went through a period of great inflation and the subsequent great moderation, followed by the global financial crisis, and then faced a period of " low for long " before the pandemic. there is a view that the current ongoing global inflationary pressure will eventually subside and that a period of " low for long " will resume. on the other hand, there is also a view that the current period of high inflation will change people's views on prices, leading to a departure from " low for long. " we have seen higher levels of public and private debt as a result of the pandemic and the policy responses. in addition, people have once again been concerned about geopolitical risks since 2022, leading to a partial reversal of globalization. therefore, it may be difficult to deny the possibility that we are already in a new normal that is different from the period of " low for long. " the second challenge is about the changes in central banks themselves. in the period of " low for long, " many central banks faced the effective lower bound of policy rates, which is the traditional policy instrument, and have created various unconventional policy toolkits, including large - scale asset purchases and forward guidance. while a number of empirical studies support some effectiveness of these instruments in stimulating demand, it seems that the mechanisms at play are not fully understood even today. compared to conventional instruments, which have a long history, unconventional instruments have issues such

plan to set up an industry - led disclosure task force on climate - relate risks in 2016. this initiative was welcomed by the g20. bis central bankers ’ speeches de nederlandsche bank and sustainable finance now, as frank elderson will elaborate on this afternoon, de nederlandsche bank believes it can – and must – contribute to sustainable development. it follows from our legal mandate. and it follows from our mission, which is to contribute to the sustainable prosperity of the netherlands by safeguarding the financial stability. to achieve this, we have begun to incorporate sustainability into our core business. we are conducting research into the carbon bubble, the energy transition and sustainable investments in the pensions industry. the outcomes will be used to advice policy makers and to guide financial institutions into incorporating sustainability more fully into their business. and we are exploring ways to integrate sustainability more fully across our own range of instruments. over the coming period, we will define the exact scope and scale in close co - operation with all our stakeholders. what we do know, however, is that we will increasingly take a forward - looking approach and assume the role of catalyst. this way, we hope to ensure that : – business models of financial institutions are sustainable over the long run ; – the interests of financial service clients are not subordinated to those of the industry ’ s shareholders ; – the organisation of social welfare does not lead to an unintended distribution of wealth and income among generations or groups ; – solid government finances contribute to solid economic development ; – no financial or economic disbalances occur ; – and finally, that the external effects of the economy – including the generation and usage of energy – are adequately priced and regulated. closing remarks ladies and gentlemen, we are at a crossroads. the challenges to our system will have serious, long - term consequences unless we act now. and sustainable development is key to securing the wellbeing and welfare of this generation and the many that will follow. de nederlandse bank is eager to play a catalysing role and use its instruments to promote sustainability. i challenge you to do the same. thank you. bis central bankers ’ speeches