from three models ( dynamic nelson - siegel, rotated dynamic nelson - siegel and dynamic svensson - soderlind ). the latest observations are for 21 october 2022 ( daily data ). in the euro area, an additional source of volatility is the risk of financial fragmentation along national lines, which can impair the homogenous transmission of monetary policy throughout the euro area. the current environment therefore requires us to be prudent in adjusting our monetary policy across all instruments. there are three key considerations here. first, our decisions and communication on the pace of normalisation should avoid amplifying market volatility. there is a case for frontloading our policy adjustment given the need to keep expectations anchored, especially in view of the very accommodative stance from which normalisation started. but such frontloading should remain commensurate to the benefits and risks it creates. when it comes to managing inflation expectations, ecb staff analysis finds that the benefits of surprising markets with bigger - than - expected rate increases is limited in the euro area. [ 25 ] and if these bigger - thanexpected increases are interpreted as signalling a higher terminal rate, rather than simply frontloading the normalisation, we could have a stronger impact on financing conditions – and ultimately on economic activity – than intended. additionally, a bigger - than - expected rate increase may heighten volatility and have a stronger impact in the current highly leveraged environment after a decade of very low rates and ample liquidity. so when calibrating our stance, we need to pay close attention to ensuring that we do not amplify the risk of a protracted recession or trigger market dislocation. second, we must be clear about the sequencing of the normalisation process. we should avoid “ cliff effects ”, continually monitor the market response to our measures and consider the feedback between our different instruments. currently, our policy rate remains a suitable marginal instrument of normalisation. it is the instrument we know best. we have a comparatively limited understanding of the effects of reducing the size of our balance sheet. the size of our balance sheet will be significantly reduced as targeted longer - term refinancing operations ( tltros ) mature and banks likely make early repayments after the decision we took last week to adapt the tltros ’ terms and conditions to the current monetary policy context. we should take the necessary time to assess the impact of our rate hikes and of phasing out the

next review by the caribbean financial action task force later this year. a sustainable financial sector is also a sector that can withstand setbacks. for instance by making sure that savings are protected in the event of a bank failure. we learned from the global financial crisis how important that is for ensuring and safeguarding trust in the financial system. we learned that without trust there is no 2 / 4 bis - central bankers'speeches financial system. so it is good news that your deposit guarantee system is almost in place. but to make real progress towards a sustainable economy, towards a sustainable future, we have to look at what entrepreneurs can do. " son'e, dese'e, logr'e ( dream it, wish it, achieve it ) " i am impressed by how quickly the tourism industry in sint maarten and curacao has recovered after the pandemic. for sint maarten this came in the wake of hurricanes irma and maria in 2017. the speed of the recovery from this devastation has exceeded expectations. the tourists are back in force. that is good news, but the success of the tourism sector also leads to new challenges, of course. challenges for the environment, because tourists not only use energy and produce waste, they can also be a threat to biodiversity. and naturally you want those beaches to stay pearly white and your flora and fauna breathtaking. not only because they are a source of revenue, but because they are your heritage and your home, and because they are too beautiful to neglect. a good reason to look for diversification. to look for other business opportunities outside the tourism sector. another reason, of course, is that diversification makes your economy less vulnerable. a vulnerability you experienced during the pandemic. and diversification can be found in investments in the energy transition, a double step towards a sustainable future. curacao is currently heavily dependent on fossil fuels, which produce high levels of greenhouse gas emissions. to reduce these emissions, it is necessary to switch to renewable energy sources such as solar and wind energy, and energy storage technologies. this transition takes time, money and manpower. it requires investments and efforts, it requires entrepreneurs with vision and courage. and the willingness to work together. because a lightly populated island like curacao cannot make this transition on its own. you need to attract foreign investments and engage in international collaboration. and that is what you are doing. a good example of such a collaboration is the memorandum