22 january 2018 address to the club siglo xxi luis m. linde governor introduction let me begin by thanking the chairman of the club siglo xxi, and my good friend, chencho arias, and the management of the club for their kind invitation to me to join you today. over the years this club has seen debate on all – or practically all – matters, and naturally on economics too, which will be our subject today. my address will focus on the european and spanish economic situation. situation of the european economy with a decade now having elapsed since the international financial crisis began, we can say that the euro area is finally in a phase of sound and vigorous economic expansion. gdp growth is expected to have posted a growth rate of around 2. 5 % in 2017, a figure not seen since the early years of the monetary union. the favourable economic situation extends, moreover, to all corners of the area, including the economy that has undergone the greatest difficulties, namely greece. it is expected that in the coming months greece may successfully conclude its third financial assistance programme. further evidence of the soundness of the recovery is the dynamism of business investment following years in which the expansion of household demand, acting as the sole engine of growth, appeared to be decoupled from the need for firms to increase their capital. reflecting the strength of the expansion has been a notable reduction in unemployment rates, which are generally standing at pre - crisis levels. however, substantial cross - country differences persist in this area, with unemployment levels ranging from below 4 % in germany to 20 % in greece. the favourable financing conditions associated with the extraordinary monetary policy measures implemented by the eurosystem have no doubt been one of the essential determinants behind the economic recovery transforming into a vigorous expansion. to illustrate this, the estimates made by the banco de espana suggest that the monetary policy measures contribute to accounting for practically half the euro area economy ’ s observed nominal growth since mid - 2014. adding to this is the greater buoyancy of world trade, which recouped growth rates not observed in the five previous years. this result reflects the favourable cyclical juncture at which many advanced and emerging economies now stand, but also a true recovery in the sensitivity of trade to global growth, despite the protectionist threats that have emerged and that may put a brake on this fundamental engine for economies as open as the european ones are. the strength of exports has contributed notably to sustaining the greater bu

##rtered territory for everybody. the main challenge is to understand these activities, technologies, players and instruments before it is too late and they originate disruptive episodes. largely, this can only be achieved through strengthened see “ the cost of cybercrime ”, ninth annual cost of cybercrime study, accenture, 2019. and strategic collaboration not only across regulators but also with financial market participants. - esg principles : climate - related risks besides the new risks stemming from the irruption of new technologies, at a time when esg principles are gaining momentum i would also like to highlight risks to financial stability from climate change and governance failures. climate change and the transition towards a more sustainable economy is currently a most topical issue. this is so for obvious reasons. it is a challenge that affects virtually all economic and social agents, and it has the potential to lead to a major transformational change not just for the economy but for society at large. of course, the financial sector is not immune to these developments. in particular, climate change may affect financial stability through two types of risks. following a classification that has already become standard, we can distinguish between physical and transition risks. the former have to do with the direct consequences of climate change on the value of financial and real assets, due for instance to natural disasters, floods, drought and migration flows. the latter refer rather to the impact on financial and real assets of the regulatory, fiscal and technological changes that could take place in the transition towards a more sustainable economy. it is fair to say that, at this stage, both regulators and financial sector participants have relatively little knowledge about their exposure to these risks. however, the large number of public and private sector initiatives in place is likely to accelerate this learning process in the near term. for instance, as a member of the network for greening the financial system ( ngfs ), which comprises more than 50 central banks around the world, the banco de espana is actively contributing to raising awareness in the industry about climate - related risks, increasing data availability and developing the necessary analytical tools for a rigorous assessment of the impact that these risks could have, not only on the spanish financial sector as a whole, but also on the solvency of individual entities. insofar as these risks are properly accounted for, not only the financial sector will be in a better position to cope with the consequences of climate change but, through the proper pricing of these risks, it will help to efficiently channel the resources needed to