legislator to make this explicit by introducing a legally binding requirement for banks to have such paris - compatible transition plans as a capstone to the legislative and private sector initiatives already being put in place. these transition plans should highlight at any given point in time, from now until 2050, the bank ’ s alignment and potential divergences with the relevant policy objectives through which the eu implements the paris agreement. such a transition plan should be part of a bank ’ s strategysetting and be closely linked to its business model and business plan. it should contain concrete intermediate milestones from now until 2050 and the associated key and performance indicators so that the bank ’ s management and the competent authorities can at all times understand the risks arising from a possible misalignment with the transition path. if banks fail to meet these milestones, competent authorities – including prudential supervisors – will have to take appropriate measures to ensure that this failure does not result in financial risks. for ecb banking supervision, the main concern is the level of banks ’ risks exposures. have the exposures been sufficiently mitigated and are they prudent? have the banks sufficiently taken into account the economy ’ s adaptation to the climate crisis and the associated changes in consumer preferences? as c & e risks become increasingly widespread and more material, banks will, inevitably, be exposed to them. from a supervisory perspective, adequate mitigation therefore needs to be in place. we see that more and more banks are realising this and are taking up commitments to this end. this creates the space for us to act as supervisors. but in addition to banks ’ exposures to an economy increasingly marred by climate change and banks ’ own stated intentions, a legal obligation for banks to have a clear, detailed and prudent transition plan in place would increase the consistency of the regulatory and supervisory framework and contribute to maintaining a level playing field. having references for milestones and yearly targets for every economic sector will make our oversight of banks ’ transition strategies more effective and thus help the european banking sector achieve an orderly transition towards carbon neutrality, starting today. formulating transition plans with these characteristics must be one of the top guiding principles for banks as they step up their risk management to address the effects of the climate crisis. it was also in this context that the european union raised its 2030 climate ambition in what is called the fit for 55 package. in the same vein, the ecb ’ s focus on these transition plans would be less on

mario draghi : strengthening the foundations of the euro area and maintaining price stability speech by mr mario draghi, president of the european central bank, at the wirtschaftstag 2012 “ kapitalismus in der krise? die zukunft der marktwirtschaft ” der volksbanken raiffeisenbanken, organised by genossenschaftsverband e. v., frankfurt am main, 7 november 2012. * * * sehr geehrte damen und herren, es ist mir eine große freude, heute hier bei ihnen zu sein. i am very pleased to have the opportunity to speak to you today. small - and medium - sized enterprises – and the banks that finance them – are the backbone of the german economy. your continued success is vitally important – not only for germany, but also as a key driver of growth and employment in the euro area as a whole. for this reason, you are a very important constituency for the european central bank ( ecb ). we pay close attention to your experiences and your views of the future. for example, through surveys that we conduct twice a year, we are able to gather valuable information on the access to finance of smaller companies in the euro area. the most recent survey was released only last friday and relates to the period from april to september 2012. it contains information from about 7, 000 small and medium - size firms throughout the euro area, of which around 1, 000 are from germany. the findings are encouraging for firms in germany. banks remain willing to provide them with loans. but the situation for smes in the euro area overall is more difficult. many are reporting a deteriorating financing situation. the availability of bank loans for smes across countries has become increasingly divergent. these developments reflect the fact that the economic and financial situation in the euro area remains challenging. i would like to use my address today to discuss that situation and to share with you the ecb ’ s views. i will focus on two themes in particular. my first theme will be the important steps being taken by governments to put the euro area on the path back to stability. individually, they are addressing their deep - rooted economic challenges. collectively, they are working to strengthen the foundations of the euro area. my second theme will be the measures taken by the ecb to maintain price stability and to remove unfounded fears about the euro area. these measures are essential