the climate and environmental risk intensity of these different bonds is not obvious in the absence of a clear and reliable framework to assess their compatibility with the paris agreement. at the same time, since the pandemic, the universe of supranational bonds issued by eu institutions has increased significantly, with a relatively large proportion of green bonds. [ 8 ] when there is no clear monetary policy rationale for preferring domestic sovereign bonds, in my view we could consider increasing the share of eu supranational bonds in our total bond holdings to avoid potential climate and environmental risks and better align our balance sheet with the general economic policies of the eu. our commitment to avoid climate - related risks that are detrimental to price stability and to align with the general economic policies of the eu is part of our monetary policy strategy. therefore, it applies to everything that we do. beyond our bond holdings this includes our collateral framework. to support our efforts to align with a paris - compatible transition path, we have recently started disclosing our exposures to climate - related financial risk. [ 9 ] we will regularly review our measures to ensure that they are fit for purpose and aligned with the objectives of the paris agreement and the eu ’ s climate neutrality objectives. conclusion let me conclude. if the macro - financial developments of the past year have taught us anything, it is to remember the importance of having dedicated institutions responsible for maintaining price stability and the soundness of our financial system. as central bankers and supervisors, this is our job. we are not climate and environmental policymakers. we are climate and environmental policy takers. we need to take climate and environmental factors into account if we want to deliver on the important supervisory and monetary policy mandates that we have been given. by failing to do so, we would be failing in our mandates. and believe me, we won ’ t. thank you for your attention. 1. the federal reserve board, the federal deposit insurance corporation, the federal insurance office, the federal housing finance agency, the office of the comptroller of the currency and the department of financial services of the state of new york. 2. yellen, j. l. ( 2023 ), “ remarks at the first meeting of the fsoc climate - related financial risk advisory committee ”, us department of the treasury, 7 march. 3. smith, a. b. ( 2023 ), “ 2022 u. s. billion - dollar weather and climate disasters in historical context

speech policymakers as policy takers – accounting for climate - related and environmental factors in banking supervision and monetary policy speech by frank elderson, member of the executive board of the ecb and vice - chair of the supervisory board of the ecb, at the peterson institute for international economics washington dc, 21 april 2023 central banks and supervisors are not climate and environmental policymakers. central banks and supervisors are climate and environmental policy takers. there are a lot of climate - related and environmental factors to take into account to deliver on the mandated objectives of central banks and banking supervisors. this is not a message that is just coming from me. it is, in fact, the global consensus among central banks and supervisors as established through the network for greening the financial system, which has 121 members worldwide, including six authorities in the united states. [ 1 ] it is acknowledged in the work programmes of global standard - setting bodies such as the international sustainability standards board, the financial stability board and the basel committee on banking supervision. and it is reflected in the actions taken by central banks and supervisors in the pursuit of their mandates. today, i will explain why central banks and supervisors taking climate - related and environmental considerations into account should not be seen as controversial. i will outline how the actions that central banks and supervisors take to account for climate - related and environmental factors follow from their democratically assigned mandates. i will show how these actions build on the awareness that the economy will be subject to increased shocks from ongoing climate and environmental crises while undergoing one of the biggest structural transformations in modern history. and i will show that these developments without any doubt will have a material impact on the financial sector too. the many examples of climate - related and environmental risks when talking about this topic last month, us secretary of the treasury janet yellen was very clear when she said that such impacts are no longer hypothetical. [ 2 ] there are many examples on both sides of the atlantic : intensifying storms along the coasts of the united states ; severe floods and droughts across continental europe ; and wildfires in california florida, italy and spain. both extreme rainfall and extreme droughts are on the rise in the places where we live and work because they are on the rise all across the globe. it is estimated that in the united states the five - year average annual cost of billion - dollar climaterelated disasters, including 2022, is now usd 119 billion, which is triple the long - term average. at the same time