andreas dombret : international coordination to enforce regulatory reform speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the salzburg global seminar “ financial regulation – bridging global differences ”, salzburg, 16 august 2012. * 1. * * introduction ladies and gentlemen, to cut to the chase : international collaboration between regulators has never been so challenging – and yet never has collaboration been so important. let me explain. 2. financial sector reform – time to slow down? the regulatory community is currently facing enormous pressures. the sovereign debt crisis has given a fresh impetus to calls to water down or delay regulatory reform. some argue that the ongoing uncertainty in financial markets and the weak global economy are good reasons to ease up on regulatory pressure. they say the financial sector is being asked to do too much too soon, and regulators should slow the speed of adjustment. yet i see it as more a case of “ too little, too late ” : if there is a reproach to be made, it is that regulatory progress has not been faster. the sovereign debt crisis, which is not least driven by systemic problems in some countries ’ banking systems, underscores the urgent need to make the financial system more resilient. relying on financial markets ’ self - regulation will not do, i am afraid. we must deliver on our promise and extend regulation and oversight to all systemically important financial institutions, instruments and markets. to deliver this promise, close international collaboration is essential. given the truly global financial system, “ going it alone ” is no longer a viable option. it will only lead to the migration of business and to regulatory arbitrage, undermining not only the integrity, efficiency and orderly functioning of financial markets, but ultimately undermining financial stability. 3. international consistency versus one - size - fits - all the crisis has clearly demonstrated that countries cannot successfully regulate their financial markets and firms in isolation. capital flows do not stop at geographical borders ; quite a number of financial institutions operate globally. therefore, an internationally coordinated regulatory response is imperative. to be successful, reforms must be implemented at least at the major financial centres. international cooperation is not an end in itself, however. instead, i suggest to measure its value by the extent to which it provides financial stability. while adopting a robust, common set of rules is essential, it is neither practical nor desirable to fine - tune all details of financial regulation internationally. as the characteristics of each country

##think the policies of central banks. there is another important factor that could push inflation higher in the future. and that factor 4 / 7 bis central bankers'speeches could be strengthened by the russian aggression against ukraine. i am talking about the green transformation of our economies. this process of “ decarbonisation ”, as it is known, which gained urgency as this new geopolitical event unfolded. in particular, our economies ’ dependence on fossil energy is increasingly becoming an issue not only for climate policy but also for national security. in general, carbon pricing is considered the most efficient way to reduce carbon emissions. higher carbon prices have an impact on carbon emissions, but also on consumer prices. at least during the transformation period, they would make energy more expensive and drive up the production costs of goods. furthermore, the necessary, accelerated transition to renewable energies inevitably implies new and costly capital investment, while existing capital stock has to be written off more quickly than expected. one specific aspect of this is investment in the carbon industry. according to the international energy agency, investment in oil and gas supplies has been reduced sizeably since 2015, in part because of uncertainty about climate - related policy measures. this low investment would suffice to meet demand only if there are strict climate policies to reduce carbon - related emissions to net zero by 2050. under currently implemented climate policies, however, projected demand is higher than supply. 7 during the transition phase, the decarbonisation of our economies may thus add to inflationary pressures. we do not know exactly to what extent. but even in the case of an orderly transition, the euro area could temporarily experience significant price pressures. the network of central banks and supervisors for greening the financial system estimates that climate policy measures could increase annual inflation rates in the period up until 2030 by between 0. 3 pp and 1. 1 pp, relative to a scenario without climate change and without climate policies. these numbers are the outcome of an orderly transition. in alternative scenarios, figures could be much higher. 8 to sum up : the war in ukraine is unlikely to bring about major new inflation dynamics on its own. but it may clearly accelerate pre - existing tendencies in both the short and the long run, as exemplified in energy markets and international trade. 4 implications for monetary policy how should monetary policy respond to these developments? clearly, the eurosystem must ensure that the current elevated inflation does not become entrenched and persist at an excessively high level over the