Sabine Mauderer: Climate change and geopolitical shifts - accelerating the sustainable transition

Speech by Dr Sabine Mauderer, Member of the Executive Board of the Deutsche Bundesbank, at the Eurofi Financial Forum 2022, Prague, 7 September 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

1 Introduction

Ladies and gentlemen,

Having just arrived from Germany, I'm enjoying the pleasant, slightly cloudy weather in Prague. It is very different from what we have experienced over the summer. This summer has been hot, unbearably hot – with temperatures reaching 40 degrees Celsius or higher. Scorching heat coupled with little to no rainfall has caused an unprecedented stress on water levels.

Two-thirds of Europe is subject to a drought warning or alert, according to the European Drought Observatory. This could be the worst drought in at least 500 years.

The severe rainfall deficit is increasing the risk of fires. The wildfire in the Bohemian Switzerland National Park was terrible, the smell of smoke even reached as far as Prague.

Of course, such weather extremes are not entirely new, but their magnitude and frequency are frightening. It shows: The climate change is not a future problem. The climate crisis is at our doorstep.  

In addition to the human tragedy, the proliferation of extreme weather events has economic consequences. The European Council estimates that the financial losses caused by extreme weather and climate-related events exceeded 487 billion euro in the EU 27 over the last 40 years. On average, only around 23% of the total losses were insured.

And it is widely understood that climate-related extreme weather events will become more frequent. Without mitigating action, they could result in even greater losses going forward.