will keep supervision strictly separate from monetary policy. the supervisors will have to take care of their reputation with respect to banking supervision, while the monetary policy - makers will take care of their credibility with respect to price stability. i actually believe that our monetary policy will become more effective if supervision is carried out well, because healthy banks will ensure that our monetary policy is better transmitted to the real economy. bis central bankers ’ speeches and what do you expect of davos? praise, because you have rescued the euro area, or criticism because you are not doing enough? both. bis central bankers ’ speeches

speech climate change and financial integration keynote speech by luis de guindos, vice - president of the ecb, at the joint ecb and european commission conference on “ european financial integration and stability ” frankfurt am main, 27 may 2021 introduction for europe, financial integration and stability are two sides of the same coin – a symbiotic relationship where greater integration aids stability, and stability underpins greater integration. equally, financial fragmentation can exacerbate instability, as the global financial crisis clearly showed. climate change – the topic of this afternoon ’ s session – poses an emerging threat to financial stability. yet, as i will discuss in my remarks today, it also presents us with an opportunity to forge deeper integration in order to tackle this common challenge. policies that foster stronger and more resilient financial integration within the euro area are needed more urgently than ever. financial integration in the euro area let me begin with a quick recap of why financial integration matters. [ 1 ] when a negative shock hits the whole euro area, monetary policy can act to mitigate the impact on output and inflation. but when a shock hits an individual country or region – known as an asymmetric shock – other mechanisms are required. in this situation, financial integration can help mitigate the impact through improved public and private risksharing. lower economic activity following the shock typically reduces the profitability of local banks and stymies credit creation. continued lending from other parts of the euro area can therefore help cushion the impact and support consumption and investment. in addition, holding foreign bonds – which are less affected by the asymmetric shock – helps maintain income and support domestic consumption. in the united states, these channels alleviate around 60 % of the impact of state - level shocks on gdp growth, compared with just 20 % in the euro area. indeed, the contribution of credit smoothing in the euro area was negative during the global financial crisis as cross - border credit provision evaporated, worsening the recessions in the periphery. during the pandemic there have also been sizeable swings in measures of financial integration, albeit more muted than during the financial crisis. [ 3 ] indicators based on the convergence of asset prices declined sharply at the onset of the pandemic, but then rebounded following the ecb ’ s announcement of substantial monetary accommodation and subsequent progress on european fiscal support packages ( chart 1 ). movements in quantity - based financial integration indicators, which reflect cross - border asset holdings, have been slower