is the most important lever. ensuring an adequate carbon pricing system is a task for elected governments, not for central banks. clearly, timely action is of the essence here. timely action would allow for a stepwise approach. it would prevent disruptive measures as well as policy errors as a result of time pressure. 3 the merits of transparency and disclosure of climate - related risks – a focal point of the ngfs agenda key insight number two is that the ﬁnancial system can drive real economic transformation through transparency and disclosure of climate - related risks. financial institutions must be put in a position in which they adequately price and manage climate - related risks. a solid foundation is needed as a ﬁrst step : a classiﬁcation system, a common “ green ” language for all parties involved. helping them to understand whether an economic activity is environmentally sustainable. the eu taxonomy is a concrete example of a common “ green ” language. it could provide orientation for others to follow suit – even if it is not a perfect solution. adequate information on climate - related risks is a key requirement for making well - informed investment decisions. reporting companies can beneﬁt directly from providing high - quality disclosure of climate - related risks. increased awareness and more informed strategic planning will help companies to manage ﬁnancial risks, particularly in the transition period to net zero. for ﬁnancial institutions, an in - depth understanding of climate - related ﬁnancial risks should be an integral part of their risk management systems. for example, a bank granting a loan must be able to determine • a company ’ s carbon footprint, • what proportion of revenues it generates from sustainable activities, and • how much it invests in sustainable business models. https : / / www. bundesbank. de / en / press / speeches / climate - risk - the - merits - of - transparency - and - the - role - of - central - banks - 851634 2 / 4 24 / 11 / 2020 climate risk – the merits of transparency and the role of central banks | deutsche bundesbank financial risks cannot always be avoided, but they must be managed, disclosed and be subject to adequate pricing. with the right information, risks can even turn into opportunities on our transition pathway to a more sustainable economy. 4 what central banks can do to encourage climate - related risk disclosure now, what can central banks do to encourage climate - related risk disclosure aside from their roles in prudential supervision and ﬁnancial stability? the starting

. in addition, the construction boom witnessed in other euro - area countries also came to an abrupt end during the crisis, with the result that the ratio for the euro area excluding germany has now returned to levels close to the german ratio. this effectively disproves claims that the german private sector is investing too little, be it by historical or international standards. in any case, it is not possible to increase private investment by decree. when it comes to private investment decisions, expectations pertaining to growth and income are of pivotal importance. against this backdrop, many commentators point to public investment, which can be directly influenced by the government. with regard to public investment, germany lags well behind the rest of the euro area. however, this fact alone does not justify assertions that the state should invest more. even so, public net investment has been negative for some time now, and there indeed seems to be room for improvement. infrastructure weaknesses can inhibit growth considerably and there are certainly regional shortcomings in germany. while a good public infrastructure is important, it does not require higher debt. nevertheless, germany has a good infrastructure on the whole. according to the global competiveness ranking of the world economic forum, only six countries have a better infrastructure ( the us is ranked 12th ). the medium - term growth prospects of the german economy also depend, of course, on an improved economic outlook in the other euro - area countries. this brings me to the second part of my speech : the future of the monetary union. 3. the euro area – structural reforms needed when the euro - area crisis began five years ago, many people referred to it as the “ euro crisis ”. however, it was not a currency crisis but a cocktail consisting of a debt crisis, a banking crisis and a balance of payments crisis. while the underlying problems differ slightly between individual countries, the key to overcoming the crisis lies with the affected countries themselves. in the years following the introduction of the euro, fiscal and economic policies in some member states failed to meet the requirements of a monetary union. these countries bis central bankers ’ speeches experienced strong capital inflows. unfortunately, the lion ’ s share of this capital flowed into private or public consumption or into an oversized housing sector. on the back of heavily exaggerated growth expectations, a decrease in competitiveness owing to generous wage settlements and insufficient financial regulation, sizable imbalances accumulated which then contributed to the crisis. hence, to resolve the crisis it is the countries themselves that