, otherwise known as “ carbon capture and storage ”. what i ’ m saying is that some of the innovative products and processes to better mitigate climate change already exist. conclusion ladies and gentlemen, 6 / 7 bis central bankers'speeches i ’ d like to end on this positive note and return to the questions i posed at the beginning : who plays what role in mitigating climate change? who needs to decide what, and what action is required? policymakers set the legal framework for business and society to act in a climate - friendly way. the financial system takes a risk - aware approach to directing financial flows into a sustainable economy. central banks ’ climate focus is mainly on financial stability, but also on banking supervision, the financial markets as well as, to an extent, the impact on monetary policy. but it will be crucial for the real economy to transform, particularly the production sector. for this to happen, though, ultimately consumers have to change their consumption patterns and demand environmentally friendly products and services. every one of us bears responsibility. the appetite for change exists. all we need to do now is act with determination. let me end today ’ s speech with another goethe quote, then : “ enough words have been exchanged ; now at last let me see some deeds! ” thank you for your attention. 1 www. un. org / sustainabledevelopment / blog / 2019 / 09 / unite - in - science - report / 2 esg stands for environmental, social and governance. 3 “ the imf is gearing up very rapidly to integrate climate risks in our surveillance work. ” 4 www. un. org / en / climatechange / assets / pdf / cas _ main _ release. pdf 5 see deutsche bundesbank, monthly report, october 2019. 7 / 7 bis central bankers'speeches

westphalia and brandenburg – have recently followed berlin ’ s lead and commissioned tailored sustainability indices as a benchmark. this involves assessing enterprises according to esg criteria ; the bundesbank can apply the resulting benchmark to the portfolios of the federal states. the public sector is therefore leading by example. this is crucial to the acceptance of sustainable finance in germany. as guardians of financial stability and as banking supervisors, we central banks see climate change as a source of financial risk. we need to get to grips with the effects of climate change on the stability of individual institutions and on the stability of the financial system overall. that ’ s why central banks are calling for greater market transparency and better data availability. who is affected by climate risks and how – via loans to certain industrial sectors, for instance? these are some of the important issues that the bundesbank will also be tackling in this year ’ s financial stability review. financial institutions need to pay proper attention to climate risks in their risk management. in terms of financial supervision, key factors therefore include better risk models at individual institutions and better awareness of how climate risks are distributed within the financial system. financial supervisors will need sophisticated methods to identify the vulnerabilities caused by climate risk more clearly. a “ climate stress test ” should form part of our toolkit. but before this can happen, we need the right data and a better understanding of the basic issues. we need to apply a longer time horizon to our entire analytical framework if we are also to factor in longer - term climate effects. so our intended course of action is not simple, but it is effective – and we are not alone. two weeks ago, i was in washington, d. c., where i took part in a panel discussion with kristalina georgieva, the new head of the imf, who emphasised that the imf is losing no time in preparing to incorporate climate risk into its country analyses. 3 b. policy the imf is a sort of interface between central banks and policymakers. this brings me to the most important of the parties involved when it comes to creating a framework for the transformation we need : political stakeholders. the framework established by policymakers needs to be environmentally and economically effective. it must offer planning certainty to the real economy and the financial markets alike. the key is to keep the costs of transitioning to a low - carbon economy as low as possible for the economy and to distribute these costs efficiently and, at the same time,