green swan 2021 global virtual conference – 2 june 2021 never too much and never too many : how to transform global discussion into global action against climate change speech by francois villeroy de galhau, governor of the banque de france ladies and gentlemen, this “ green swan 2021 global virtual conference ” co - sponsored by the banque de france, the bis, the imf and the ngfs should have taken place in paris, birthplace of the climate agreement and of the ngfs, but it is my pleasure to welcome you online. central banks ’ commitment to the climate cause may seem obvious today. but few issues have seen such a rapid and massive change. my generation changed its mind, i changed my mind. many of us now share the imperative of hans jonas : “ in your present choices, include the future wholeness of man among the objects of your willi ”. in amsterdam three years ago, for the inaugural conference of the ngfs, i referred to greening finance as our “ new frontier for the 21st century ”. today, the challenge could almost look inverted : we have gone from the risk of “ doing too little, too late ” to the criticism by some of “ too many doing too much ”. no : we are not doing too much ( i ), and we are never too many ( ii ). but before starting, i would like to draw two useful and cautious lessons from the above - mentioned criticisms. first, we, central bankers and supervisors, cannot do everything by ourselves ; we are not the only green game in town. nothing will replace an appropriate carbon price. second, we are acting in the very name of our mandate : our consideration for climate change is neither an abuse of our mission, nor a mere militant conviction, and we will act with the same technical credibility and professionalism as we do in our traditional domains. i. not “ too much ” : what it is our duty to do in a somewhat “ proliferating ” environment, let me suggest some clarification, with a two - dimensional quadrant. the vertical axis – the most obvious one – relates to our missions as supervisors and includes both climate - related risks for financial institutions and opportunities – linked to green finance. the horizontal axis relates to our missions as central bankers and includes responsible investment of our nonmonetary portfolio and monetary policy. for many central banks, implementing responsible investment strategies has numerous benefits : central banks can then practice what they preach as supervisors, protect their own balance

difficult – public policies. the ecological transition holds risks, including on inflation as the gradual switch to greener energies may entail higher and more volatile prices, at least in the intermediate phase. central banks are closely monitoring this debate about a possible “ greenflation ”. so far, the evidence points to a non - negligible but limited direct contribution of climate policy in the recent increase in inflation. for example, the ongoing rise in co2 prices in the european ets market, which we are already taking into account in our inflation projections, has a modest positive impact on inflation. and the implementation of a carbon tax in germany in 2021 has had a discernible impact in 2021 : combined with other measures to tackle climate change, the overall impact on german consumer prices was estimated at 0. 4 percentage point in 2021. that said, climate transition is far from being the primary cause of the recent surge in energy prices across the world. indeed, it has more to do with a combination of global factors : rapid demand recovery from the pandemicinduced recession, supply disruptions, geopolitical tensions. and in the specific case of europe, the shock on energy prices is amplified by the run - up in wholesale electricity market prices, due to a shortage in natural gas. page 9 sur 9 afterwards, beyond our projection horizon, the transition to net zero might have a more significant impact on inflation, especially if it were to be disorderlyii. the net zero transition would then result into a negative supply shock, in particular if the capacity increase in alternative energy sources were too slow. in addition, the reallocation of demand involved by the transition might trigger relative prices changes in some sectors. the level of r * – the natural interest rate – could also be affected in two opposite ways : higher green investments will increase it ; but a negative impact on productivity growth would reduce it. on many of these questions, it ’ s too early to tell. we need urgently more analytical work on the macroeconomic modelling of climate transition ; more than ever, monetary policy will remain a judgment exercise, looking through temporary phenomena while averting lasting increases in inflation. central banks will have to ensure that these shocks on relative prices do not result into a lasting increase in inflation. one thing is certain : the sooner we start the transition, the better to ensure longterm sustainable growth and price stability. * in economic and financial matters, there is always a degree of uncertainty. in french, the