the financial crisis, a number of european banks are still saddled by disturbing amounts of non - performing loans ( npls ). therefore, scaling back these legacy exposures is one of the foremost aims of banking supervisors in the euro area, and rightly so. there are two main reasons why we ’ re interested in npls. one, they make banking systems more vulnerable because they drive up both capital requirements and funding costs. two, they make it harder for the banks in question to supply credit ; this, in turn, puts the brakes on growth in the euro area. as a consequence, npls don ’ t just weigh on credit institutions ’ earnings ; they also intensify solvency risk and obstruct economic activity in europe. in this context, i would like to highlight the public consultation on the draft guidance to banks on npls which was initiated by the ecb and ran until yesterday. equipped with this guidance, banking supervisors will be in a position to uniformly assess banks ’ internal handling of npls as part of their regular supervisory dialogue. but as far as financial stability in germany is concerned, i see no immediate cause for alarm. npls are far less of a problem in the german banking system than they are in some of the other euro - area countries. at roughly 2 %, the npl rate in germany last year was well down on the euro - area average. that figure also includes non - performing shipping exposures, and they certainly do worry me because there are still no signs that the economic situation in the shipping industry is about to recover. it goes without saying, then, that we shall continue to keep a close eye on banks with substantial exposures to shipping loans. as for the institutions saddled by npls, we expect them to take measures that are conducive to promptly reducing legacy exposures and bolstering their resilience. these measures include not just thoroughly cleansing their balance sheets of both existing and anticipated losses but above all conducting appropriate credit risk management and holding an adequate level of capital. 4. conclusion in summary, there are three points i would like to highlight. first, the supervisory environment for banks has become even more european since our 4 / 5 bis central bankers'speeches last financial stability review, and for good reason. the establishment of the single resolution mechanism at the beginning of this year marks another major milestone. however, before we take any further steps towards deeper integration, we should now gauge whether all the groundwork

and opportunities. changes in climate policies, new technologies and growing physical risks will prompt reassessments of the values of virtually every financial asset. firms that align their business models to the transition to a net zero world will be rewarded handsomely. those that fail to adapt will cease to exist. the longer that meaningful adjustment is delayed, the greater the disruption will be. like virtually everything else in the response to climate change, the development of a more sustainable financial system is not moving fast enough for the world to reach net zero. to bring climate risks and resilience into the heart of financial decision making, climate disclosure must become comprehensive climate risk management must be transformed, and investing for a two degree world must go mainstream. today, i want to focus on how the tcfd can help achieve these goals. tcfd : progress to date only two years after the final tcfd recommendations were published, support has sky - rocketed and conversations about climate - related financial risks have moved from the fringes to the forefront. the demand for tcfd disclosure is now enormous. current supporters control balance sheets totalling $ 120 trillion and include the world ’ s top banks, asset managers, pension funds, insurers, credit rating agencies, accounting firms and shareholder advisory services. 4 the supply of disclosure is responding, with four fifths of the top 1100 g20 companies now disclosing climate - related financial risks in line with some of the tcfd recommendations. 5 on every recommended metric in tcfd, disclosures have been steadily increasing, rising from an average of 2. 8 to 3. 6 over the past three years. three quarters of investors are now using tcfd disclosures when investing and the same percentage report a marked improvement in the quality of climate disclosures. 6 japanese tcfd supporters increased from 9 to 199 in just over a year and now have a market cap of almost $ 2 trillion. japanese government support through the implementation study group and the tcfd consortium has catalysed action and created a blueprint for other countries in “ how - to - tcfd ”. full list of current tcfd supporters available at : https : / / www. fsb - tcfd. org / tcfd - supporters /. the tcfd ’ s june 2019 status report assessed, using artificial intelligence, 1100 companies reports over three years from 2016 to 2018 inclusive. full report available at : https : / / www.