liabilities ( mrel ). this section draws on buch, claudia m., edgar vogel, benjamin weigert ( 2018 ), “ evaluating macroprudential policies ”, european systemic risk board working paper no 76, frankfurt a. m. seite 5 von 13 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel : + 49 ( 0 ) 69 9566 3511 or 3512, fax : + 49 ( 0 ) 69 9566 3077 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. ( 2 ) choosing intermediate objectives and appropriate indicators, ( 3 ) linking instruments to indicators through ex ante impact assessments, and ( 4 ) analysing policy effects through ex post evaluations. in a first step, the policy objective ( s ) of macroprudential policy need to be specified. macroprudential authorities use different definitions of the policy objective, but they all aim at reducing systemic risk arising from externalities. ideally, the policy objective is derived from an analytical framework which links performance of the financial system to the functioning of the real economy. in a second step, intermediate objectives need to be specified and appropriate indicators chosen. intermediate objectives are linked to the drivers of systemic risk, such as leverage, risk - taking incentives, interconnectedness, or exposure to common shocks. in many cases, it will not be possible to specify a direct, simple, and linear relationship between intermediate objectives and financial stability. for example, the link between the interconnectedness of financial institutions and the probability of financial contagion is non - linear. 5 intermediate objectives can thus be state - dependent as their relationship to financial stability depends on the structure and state of the financial system and real economy. in a third step, the activation or recalibration of policy instruments that address evolving vulnerabilities and financial stability risks needs to be considered. the decision on whether and how to activate policy measures should be based on a structured process of ex ante policy evaluation. this provides information about the relative contribution of policy instruments reducing systemic risk. trade - offs between stability and other policy objectives can be taken into account when performing such an analysis and when calibrating instruments. _ _ _ _ _ _ _ _ _ _ _ _ _ allen, franklin and douglas gale ( 2000 ), “ financial contagion ”

stem from global warming are referred to as physical risks. in a recent survey by the european investment bank, 58 % of eu firms reported that their business is already being affected by physical risks. there is another category of risk associated with climate change – these are called transition risks. these can occur as our economies move towards net zero. carbon - intensive industries in particular may face the risk of their assets becoming stranded. to reduce these risks, the eu is committed to reaching net zero emissions by 2050. to achieve this target, climate policies will be put in place that will inevitably trigger substantial changes to existing business models – across all industries. firms must prepare and adapt their business models. the aviation industry is no exception here, as extreme weather events can affect its business operations. but aviation itself also has an impact on the climate. carbon emissions from fossil fuels are a major driver of global warming. the aviation industry ’ s contribution to global co2 emissions is around 2. 5 %. [ 3 ] moreover, emissions from flying have risen by more than 2 % per year over the last two decades. so it ’ s high time for the aviation industry to step up its climate action. but some action is already underway. the international air transport association has committed to achieving net zero carbon emissions by 2050. [ 5 ] the international civil aviation organisation ’ s carbon offsetting and reduction scheme, corsia, is an important step towards reaching this goal. in addition, technological improvements and the usage use of sustainable aviation fuels will play a central role. sustainable aviation fuels are available today but demand is far outstripping supply. it is important to scale up sustainable aviation fuels. this requires a favourable policy environment with a mix of smart regulation and incentives. one year ago, the european commission adopted the ‘ fit for 55 ’ package to underpin the eu climate targets. this package includes the refueleu proposal, which aims to boost the production and uptake of sustainable aviation fuels. the proposal puts forward obligations for fuel suppliers to gradually increase the share of sustainable aviation fuels in fuels blends. this share should rise from 2 % in 2025 to 63 % by 2050. [ 6 ] the european parliament is even pushing for a share of 85 % by 2050. [ 7 ] in any case, by mandating the uptake of sustainable aviation fuels, the eu is creating a platform for long - term planning and setting incentives to boost sustainable aviation fuel production. this is a good example of how smart