sabine mauderer : sustainable finance : political efforts and mature markets needed speech by dr sabine mauderer, member of the executive board of the deutsche bundesbank, at the icma and jsda annual green & social bonds conference, virtual event, 13 november 2020. * * * 1 introduction ladies and gentlemen, i ’ m delighted to be part of the icma and jsda annual green and social bonds conference today. i really regret not being in tokyo. i am glad to see that japan, germany and the eu forge an alliance to combat climate change. in his first general policy address, japanese prime minister suga announced the goal of becoming climate - neutral by 2050 – like the eu and germany. today, i will focus on two topics : first, the political effort of germany and europe to push sustainable finance. second, what is needed for a mature sustainable financial market. 2 political efforts of germany and europe to push sustainable finance allow me to summarise recent political initiatives in sustainable finance, starting with germany. germany issued a green bond with a 10 - year term for the first time in september, followed by another green bond with a 5 - year term last week. both issues, with a total outstanding volume of € 11. 5 billion, attracted huge interest among investors. looking back at these successful issuances, i can conclude that it was worth entering the market a little later, but with a tailored approach. germany entered the market with the innovative “ twin bond ” concept meeting market ’ s liquidity needs : each of these “ green bunds ” is twinned with a pre - existing conventional bond with identical features in terms of its coupon structure and maturity. the twin bond concept means that the “ green premium ” is immediately apparent. notably, the yield discount of the 10 - year green bund is around 2 basis points and around 1 basis point for the 5 - year green bobl. looking ahead, the federal government is going to build a “ green curve ” over the entire maturity range of federal securities from 2 to 30 years. a detailed issuance preview for 2021 will be provided in december. apart from the federal government, there are other public issuers in germany who are already active in the market : at the state level, north rhine - westphalia has issued a number of sustainable bonds with a total volume of € 13. 3 billion, making it the top issuer in this segment. state - owned development banks are also a vehicle which can

on the use of national taxpayers ’ money, for example, are unlikely to meet with much approval. at the moment, it is not possible to tell whether policymakers are prepared to take such comparatively far - reaching steps. as i see it, the objective should not be a “ big bang ” but rather the creation of better coordinated regulations and supervisory practices. iii i wish to talk now briefly about insurance supervision. in this area, too, the differences in the regulations in europe are probably still too great for a europe - wide centralisation of insurance supervision to appear an appropriate solution. but the debate is even going beyond that - in the direction of a european “ one - stop ” financial supervisory authority. given the problems in the individual financial sectors that i have just outlined, i do not believe that this would be a suitable organisational model for europe in the foreseeable future. moreover, “ one - stop ” financial supervision is not a familiar regulatory model in europe. it would therefore probably be difficult to implement. iv therefore, my conclusion is that it is necessary to close the remaining regulatory gaps, to harmonise the existing regulations and supervisory practices and to intensify cross - border and cross - sector cooperation among the supervisors. i believe that new institutions in europe are not practicable at the moment. the existing bodies should be strengthened instead. ensuring an appropriate system of regulation for the european financial system remains an ongoing task. more than ever, this calls for a flexible response from policymakers and regulators.