for maintaining price stability. the maastricht treaty also states that the eurosystem shall support the general economic policies in the community without prejudice to the objective of price stability. there is a widely held view that maintaining price stability is the best contribution monetary policy can make to a high level of output and employment in the medium term. with regard to fiscal policy, in 1997 the stability and growth pact was agreed among the governments of the eu. this pact requires fiscal authorities to meet the medium - term budgetary objective of positions close to balance or in surplus. it thereby provides the right incentives for the conduct of sound and disciplined fiscal policies across all participating member states. safeguarding sound government finances is a means of strengthening the conditions for price stability and achieving strong sustainable growth, which is conducive to employment creation. in addition, structural reforms in labour and goods markets are the best way to address the underlying causes of the currently high level of unemployment in europe, in particular the structural rigidities in the labour market. this clear division of responsibilities enhances the credibility of monetary and economic policies in europe, increases transparency and facilitates accountability. at the same time, it requires national policies and labour and goods markets to be increasingly flexible in order to be able to respond effectively to economic shocks. well - functioning labour and product markets are needed to enable adjustments to be made to wages and prices if local or global economic conditions change. against this background, an open exchange of information among policy - makers is most helpful for a proper assessment of the impact that fiscal policies have on developments in the euro area as a whole. this assessment will form one input – among others – into monetary policy decisions aimed at maintaining price stability over the medium term. the eurosystem ’ s monetary policy strategy given the well known lags in the monetary policy transmission mechanism, it is important that monetary policy is conducted in a forward - looking manner with a clear focus on the medium term. transitory factors that are not under the control of a central bank, such as sudden oil price shocks or changes in indirect taxes, may influence prices in the short term. to the extent that such factors represent one - off changes in the price level, these effects cancel out if a longer time horizon for the stabilisation of prices is chosen. the eurosystem, like any other central bank, influences future inflation by adjusting short - term interest rates. in the transmission of monetary impulses to the real sector, the behaviour of financial institutions, corporations

alejandro diaz de leon : climate change and its impact on the financial system remarks by mr alejandro diaz de leon, governor of bank of mexico, at the conference on climate change and its impact on the financial system, mexico city, 5 december 2019. * * * good evening everyone. on behalf of banco de mexico, i am pleased to welcome the participants of the conference on climate change and its impact on the financial system. it is a great pleasure for banco de mexico to collaborate jointly with cemla, the center for latin american monetary studies, the ngfs, network for greening the financial system, and the university of zurich in organizing this meeting. the sessions that comprise the conference cover some of the main topics in climate change and its economic and financial impact. climate change and environmental degradation constitutes a challenge at national and global levels and is a source of financial risk. climate change is presenting challenges related with extreme weather events, rising sea levels, declining productivity of agriculture and fisheries, trade and supply chain disruptions, the degrading of ecosystems, reduced welfare of communities due to air and water pollution, and even mass migrations in the territories most adversely affected. in some emerging and low - income economies, poverty, an inadequate institutional framework and a weak rule of law has created a fertile ground for a predatory behavior that has significantly degraded the environment, in some cases irreversibly, deteriorating both the welfare and development opportunities of the population affected. call for global action the growing recognition of climate change consequences is influencing the core tasks of central banks. for banco de mexico, the sound development of the financial system, one of our key objectives, requires from the central bank, not only to foster financial stability and better services for the benefit of households and corporates, but also to eradicate financing and risk management practices that avoid recognition of environmental and social negative externalities and risks. globally, the voices behind this call for action are expanding rapidly. multilateral organizations are focusing increasingly their portfolios on green and sustainable activities and several central banks are in favor of decisive action. ngfs, the network for greening the financial system, was originally set up by 8 central banks and now has 51 central banks and financial supervisors together with 12 observers. the fact that this technical expert group was just created two years ago, highlights the global commitment to address climate related risks in the financial sector. the ngfs supports an orderly transition towards a low pollution and low carbon economy by promoting best practices, improving data availability