of communication. at the time of the second industrial revolution, however, when the conditions for production were changed again by the petrol engine and the electric motor, sweden was in a better position to reap the benefits. in that the social structure was more suited to adopting and utilising the new technology, the pace of modernisation was faster. production became increasingly efficient as the industrialised society took shape. electrification, motor vehicles and aviation all left their mark on developments in much of the 20th century. at the same time, it was probably not the new inventions as such that provided the conditions for the rapid economic growth in the 19th and 20th centuries. it was rather their economic applications and how they spread - thereby altering patterns of production and consumption - that determined the magnitude of their impact on long - term growth. bringing about such a development involves ensuring that it is supported by the ways in which various parts of our society function. economists talk of society ’ s institutions or a market economy ’ s infrastructure. this refers to everything from the structure of government and the degree of economic stability to how the judicial system functions, with ownership playing a major role, the quality of education and the structure of taxation. as i said, a major cause of sweden ’ s earlier difficulties in utilising steam - engines was that various social systems were not able to latch onto the new technology and use it productively. sweden simply lacked the conditions for this initially. a historical view of transformation and development one of several possible approaches to an analysis of economic developments connected with various industrial revolutions was put forward by the austrian economist joseph schumpeter in his theory of development clusters and long cycles. this approach has been developed in sweden by economists and economic historians such as erik dahmen, johan akerman, lars magnusson and lennart schon. changes in technology are often cited as a basic cause of the long cycles. technical innovations tend to be developed in clusters that play a central part in the transformation of manufacturing. these concepts are not all that easy to define but roughly speaking it is a matter of new technology leading to extensive changes in the business community, as well as in society in general. the economy is launched into a process of transformation — a sort of struggle between old and new. new products are introduced as well as new forms of production. patterns of consumption also change and so does the demand for education. growth shifts to other parts of the country. the new demand stimulates the growth of capital markets.

banks and bank supervisors, i wish to highlight the coordination carried out by the network for greening the financial system ( ngfs ), which the banco de espana joined in 2018. meanwhile, the basel committee on banking this is precisely the essence of the proposed carbon dividend act promoted by the climate leadership council, which states that “ a carbon tax offers the most cost - effective lever to reduce carbon emissions at the scale and speed that is necessary ”. supervision, which i have the honour of chairing, decided last october to commence work on the financial risks associated with climate change, while the single supervisory mechanism has decided to include climate risks in its risk map for 2020, the basis for defining supervisory priorities. 5 also of note is the work carried out by the financial stability board ( fsb ) to promote the publication by businesses of consistent and comparable financial information relating to climate change. 6 apart from international coordination, a high degree of coordination between the various economic policies is also fundamental. allow me to illustrate this with an analogy, particularly relevant to the banco de espana and the eurosystem. as we all know, the european central bank ( ecb ) has in recent years been implementing an expansionary monetary policy to achieve its inflation target, and thus support economic growth in the euro area. we on the governing council of the ecb have always insisted that the effectiveness of our measures would be increased if they were complemented by a more expansionary fiscal policy ( where the margin exists ) or an ambitious structural reform agenda. the situation of climate policy is similar. the necessary investment for the technological transformation required in our economy will hardly take place if financial conditions are not favourable or the regulatory environment penalises competition or innovation. later on i will refer to the role that can be played by the financial sector and also by supervisors, regulators and central banks. for appropriate economic policies to be designed and implemented in the climate sphere it is also essential to understand that, in the transition to a more sustainable economy, there will be individuals, sectors and even countries whose welfare will inevitably be reduced ( at least during the phase of transition to a new stationary state ). our responsibility for economic policy means we must properly identify those who are most likely to become “ losers ” and to take measures to mitigate the net negative impact on them of the transformation into a more sustainable economy. to illustrate this, let me use an example that i have referred to on other occasions : 7 the globalisation debate. from the standpoint of