sabine mauderer : putting our money where our mouths are - joint efforts to finance the global green transition speech by dr sabine mauderer, member of the executive board of the deutsche bundesbank, at the un climate change conference cop 27, sharm el - sheikh, 9 november 2022. * * * to limit global warming and adapt to the impact of climate change, large - scale investments are necessary. the international energy agency highlighted in its recent world energy outlook that, to stand a chance to limit global warming to 1. 5 degrees, investments in clean energy alone would have to reach usd 4 trillion a year by 2030 from only usd 1. 3 trillion today. 1 and a study by the london school of economics pointed out this week, even without considering the investment needs in china, emerging and developing countries will have to spend around usd 2. 4 trillion or 6. 5 % of gdp per year by 2030 on climate change adaptation and mitigation. 2 this will require both public and private funds : public money from governments and multilateral development banks especially but not only for adaptation ; and for innovative projects that mitigate climate change, private money is key, be it from private banks, funds, institutional investors or philanthropic organisations. but as such innovative projects are often risky, governments and multilateral development banks may have to take on part of this risk via equity shares to trigger the necessary private investment. such blended finance would give a boost to the green transition in emerging, developing as well as developed economies. yet public and private investors need transparency about climate impact and climaterelated risks to drive the green transition. improving transparency first, helps financial markets to work efficiently and scale up green finance, and second, allows investors to make sure that their funds are being used as they intend. regulators are in the driver's seat when it comes to increasing market transparency around climate - related risks. central banks can play a supporting role in boosting transparency. they can cooperate internationally to identify best practices as well as inefficiencies and existing obstacles. the ngfs is an excellent forum to this end. a recent ngfs study showed that transparency initiatives around the world differ significantly and that numerous divergent taxonomies, standards and guidelines have been developed. to a large degree, these differences reflect the varying needs in different markets. 1 / 2 bis - central bankers'speeches what works well in one country may not necessarily be a suitable blueprint for other countries or regions. that

of german banks earned their cost of capital last year. what can explain these weak earnings? well, the main culprit in germany seems to be a business model that is relatively dependent on interest income. such a business model poses a major challenge in the current environment of low interest rates. consequently, in the first six months of this year, the operative results of the large german banks were about 8 % below their 2013 levels – a result which was largely driven by a contracting interest margin. nonetheless, banks are also faced with a structural problem in this context : the interest margin has been declining constantly since the mid - 1980s. the banks should therefore reconsider their business models and gear them towards sustainable profitability. to be sure, the need to adapt business models is not only relevant for german banks. however, in its recent financial stability report, the imf finds that german banks are again below average in terms of reforming their business models. again, there is room to catch up with international peers. bis central bankers ’ speeches an obvious strategy for the german banks would be to diversify their sources of income away from interest income. looking at the cost - side, german banks fare rather well compared to other countries. that is the good news. but there are still options to reduce costs. in this regard, mergers may well be a potential strategy. the german banking market still offers scope for further consolidation – the focus here should, of course, always remain on arriving at a sustainable business model. as a side note : in future, european banking supervision will also keep a close watch on the business models of banks. however, we should not expect supervisors to be the better bankers. at the end of the day, management decisions have to be taken by those who bear the risks and reap the rewards. what the supervisors could do is impose additional capital or liquidity requirements whenever they have doubts about the sustainability of a bank ’ s business model. 5. conclusion ladies and gentlemen there is no doubt : european banking supervision is an important step forward in ensuring financial stability in the euro area. nevertheless, as i said earlier, unrealistic expectations are the roots of complacency and, consequently, of disappointment. european banking supervision is just the first pillar of the envisaged banking union. it has to be supplemented with the european resolution mechanism for banks. this second pillar of the banking union will be erected in 2016. eventually, the banking union will provide a stable framework for the banking system