 Hi, hello, and welcome to this London Climate Action Week event on central banks and climate change the short and long view This event is jointly organized by the LSE Gransom Research Institute on Climate Change and the Environment and the SOAS Center for Sustainable Finance at SOAS University of London and I am Ulrich Wold, the director of the SOAS Center for Sustainable Finance and also a reader in economics at SOAS and it's my great privilege to moderate this session Some logistics first. We have 90 minutes today, which will be recorded and posted online in due course We'll first do a round of off-introduction remarks by the panelists and then we'll have a discussion among the panelists and I would very much in like the audience with you To send in your questions via the chat function And I will then try to pick up the questions as best as best that I can and bring them to the panel Let me now turn to the contents and introduction of the speakers Central banks are once again playing a very crucial role in the crisis They have been intervening on an unprecedented scale to avoid to avoid full-scale financial and economic meltdown Many central banks have been taking dramatic action that would have been sheer unthinkable just a few months ago and And Against this backdrop. We have also seen caused by some on central banks to also throw their full weight behind fighting climate change and Supporting just transition now. So many have pointed out that the COVID crisis now is actually Pailing in comparison to the climate crisis. We are facing So there these calls for central banks to also fight that crisis On a much greater scale But of course others have said no, no, no, this is not the role of central banks Um We do of course all know that central banks Have been over the past couple of years starting to work on climate change on climate risk Gradually starting to integrate that into their frameworks And yet we have seen very few examples during the current crisis Where central banks have income incorporated sustainability factors into their crisis response measures so This is basically The backdrop against which we will now discuss how central banks can fulfill their mandates for macro financial stability and Align their COVID response measures with the Paris Agreement and avoid locking to a high carbon recovery But we're also looking beyond the short term current crisis and we want to discuss broader trends and changes That we may be seeing in the central banking space So are we witnessing the dawn of a new era of central banking? and if so What will or should the new normal for central banks look like? and i'm mostly lighted that um I'm joined now by a dream lineup to discuss these issues We will first have Shamshad Akhtar who is chair of the board of directors of kandas pakistan And she is actually the former central bank governor of pakistan and was the first woman to to fulfill his role and He's also as a side note on our global advisory board of our so our center for sustainable finance um second, we have danai Cripple new and i'm very sorry for Really bad pronunciation Who is the chief economist and director of research? at the official monetary and financial institutions forum on fifth Which is a stakeholder to the ngfs the network of central banks and supervisors for greening the financial system The third panelist is nick robbins Professor of finance in professor of practice in sustainable finance at the lse grand sum research institute And many of you will know that nick Was the co-chair of the un inquiry into the into the design of a sustainable financial system among many other great things that he has done And last but not least We have adam twos who is the kastrin and shelby cullum davis professor of history and director of the european institute at columbia university in new york And a leading progressive voice who's made very important interventions on the role of central banks in those fighting the climate crisis as well as the covet crisis We put Three guiding questions to all panelists Um first one. What should central banks be doing at this point in time? to support sustainable recoveries Second, do you believe that the climate and covet crisis will lead to a fundamental Reset of the practice of central banking And third, what needs to be the new central bank norm on climate? So let us start with shamshat, who is not only the former central bank governor of pakistan and actually also finance minister of pakistan But shamshat also played a leading role as un secretary general At the united nations and executive secretary of the un economic and social commission for Asia and the pacific as well as in very senior roles including vice president at the world bank and senior advisor at the adb And there she has been driving this sustainable development agenda So she's really combining both the central banking and the sustainability perspective And we're most delighted to have you shamshat. Please Give us your take And if I could please ask Non-speakers to switch off their cameras So that we have only the speakers. Thank you Thank you Yuri It's a pleasure to join all of you. I'm such a distinguished group of Speakers, but at the same time a very informed audience it looks like So you were trying to introduce me and it struck me that While as I was a central bank governor There wasn't a lot of Speak on climate change and it's perhaps those old times when central bankers were conservative Tremendously and never Entered into domains that were not typically theirs But then when I went to the united nations and one of the key things that I Faced in the united nation was a crash course on the climate change Which all of us have to do simply because we are such great advocates of climate change And in that context I do Remember that we are now criticizing that governors who initially have been very conservative and averse to To talking about climate finance because of exactly the issue you pointed out about my market neutrality that they don't want to Influence decisions to one way or the other but then We we do find that And and I first hand witnessed this when I was in g20 As the Sharpa as well as on the finance minister's track Where when I talked in my five years About climate change coming from un and pushing for the agenda They were Kind of it's not our business And then also when I used the word sustainable finance or stg's there was initially a lot of reluctance However, there was a breakthrough Within the g20 itself and some studies were done and all that So it's not just the central bankers who are also a part of the g20 But there are also the ministers of finance and the sharpas who are development oriented people where They were of course political positioning of one country versus another. We don't want to talk about commitments on on climate finance now fast forward it your question is of course What what's the short and long term view? So my first order Is that short and long term priority? Must be a definitive course correction to achieve the net zero emission target by 2050 And we sometimes forget what are the basic contours. So I'd like to define this Because that net zero emission target by 2050 is critical to reduce the temperatures to 1.5 Centigrade, which I feel personally sitting in pakistan at 45 degrees centigrade today Complacency and inaction of course are costly It is encouraging that now generally countries are preparing To enhance their national climate action plans as was confirmed in the june u n f triple c deliberations And about 121 countries have committed to achieving carbon neutrality by 2050 Since I've been in the corridors my I don't have that much faith in this progress And i'm delighted that we are having this discussion because central bankers And regulators are a very serious bodies Group of people who will make this hopefully happen if we are able to jointly convince them So that was my first point second is that despite all the cause and evidence We are still operating on business as usual Irrespective of the governments or the corporates and they're all falling short currently on the implementation of the mbc's And world has missed out on the opportunity to deploy the fiscal and monetary recovery support for covid-19 2008 Crisis and other crises as and when they have come to invest in green and sustainable recovery Covid-19 is considered the worst Catastrophe to hit the world Resulting in cumulative loss to the global economy as per the world by imf count of over 12 trillion requiring global fiscal support of 10 trillion dollars and central banks have Cut interest rates liquidity inject provided liquidity injections and Restarted the asset purchase programs of larger magnitudes Climate catastrophe of however is anticipated to be more devastating Both in nature scale and scope And of course it does not respect boundaries as much as the covid seems to Have you can still control cross-border movements? of people So it's best to invest upfront Protect our future generation and planet to save from economic and financial losses later and this logic Appeals to the central bankers who deal with money Hence you see the growing appetite now of technical work and so and so forth So despite signals of global pandemic economic and climate change episodes Every time we face a crisis the storyline Remerges we are not prepared But then our central bankers say we will do whatever it takes Of course funding is needed But we need to prepare now for climate crisis And make sure that we are showing seeds for sustainable growth and recovery Which demands preferential and priority access to sustainable development That has an economic architecture that reinforces climate action Both directly and indirectly through specific sector and thematic goals That would make its sustainable climate finance My third point is that central banks Who have already moved To non-conventional approaches to managing their monetary policy mandates Which hasn't happened in the developing world to that extent Have recently also recognized that managing climate risk is critical for monetary and financial stability Sustainable financial alliances institutional investors Non-profit organizations have become strong advocates and join the ranks of climate financiers Emphasis being placed by Mark Carney who is now the special envoy to secretary general Who we all look up to has pointed to three key areas Reporting risk and return It's welcome and providing impetus to technical work and thinking So several central banks have called on banks to report on climate related financial disclosures And required this reporting to be mandatory and Mark Carney in one of his speeches talks about how many central banks have started to work in that context But concurrently there's also the examination going on on the impact of climate risks And returns of companies and their business models It is emerging to offer scenario analysis by calling companies to define their transition paths to reach net zero emissions. So I'm circling back to my first message To conclude I have a lot to contribute, but as you said Yuri, we should come back and not take all the time up front I think the big question is what is different this time relative to COVID or others Of course in pandemic also we had a lot of Signals enough early warning signals have been offered by international scientists On alternate climate scenarios. There's a lot of technical stuff out there that forewarn global community and technicians to anticipate and prepare themselves But cracks in multilateralism has weakened solidarity cooperation and collective action Not all is of course lost as there is a coalition of ministers of finance There is a coalition now of the central bankers NGFS who's doing fantastic work and many more alliances of sustainable climate finance Institutional investors and advisory bodies like yours So there's a lot of momentum on technical work And we don't have to start from scratch The most instrumental I believe is one of your works that is the inspired Study which has been recently released and it's very Instrumental because I remember before that going to each central bank's website to figure out Where have what are the regulatory approaches they have and you've tried to take stock in one place for all that And I think more of that kind of work will help figure out is there broadly acceptance And movement or not and my conclusion is we are far from it Yes, the advanced ecbs and the central bankers in advanced countries have done a great amount of work But we are not there if you actually measure How much of the banking sector Financing flows are going through the right scrutiny Or compliant with the ESG standards Or for that matter other standards in contrast this massive scale of financing coming To meet the goals in Paris agreement through other sources. So Um It will come under discussion that there are sustainable alliances. There are philanthropic organizations. There are multilateral institutions at work So if you want real change and impact We have to get these black suited people to Start thinking on how they can be the push and the force to force the companies Through the banks who are accountable to them but banks have to render companies to be accountable to reject the the transactions which are not compliant with NDCs in their countries or for that matter To reject or do for that matter deal with the issue of stranded assets So i'm going to stop here because i'd like to hear others too. Thank you Yuri for allowing me to Speak here Thank you so much Shamsha. This is was really Very very interesting take and I I think your your your sense of urgency Came across very well, and I think that's a very Uh a crucial point and the question is what can central banks really do now and and not just develop tools over the next decade or so while the crisis Is unfolding so Let me turn over to danai. You've been very active in the discussion on central banks Role in addressing climate change and you've been interacting a lot also with Central banking community. How do you perceive the current discussion? in that central banking community and to what extent Is the ngfs really shifting the goalpost? Thanks to lian. Thanks for organizing this discussion I think this is a a set of very pertinent topics that you've put to us in terms of what is the role of central banks now at the current point of In time to drive sustainable recoveries I think one thing that I would point out Is that before this crisis hit what we were all debating not just about climate change in central banks about the role of central banks in general Was what will happen when the next crisis hits will central banks have enough Ammunition is their toolbox going to be empty? Are they going to be relevant in the next crisis? And I think what we've seen now with covet is that actually they've been very innovative. They've been able to act They've acted in a big way the fed the ecp the bank of England major central banks We're starting to see quantity of easing programs in emerging markets as well I think that's an important thing to kind of start and frame the discussion The central banks are so very active important players in a crisis And I know that nick will talk more about the specific elements of the toolbox that they have to drive a sustainable recovery So I won't go into detail there But what I'd like to frame is the different roles that central banks have because we can't talk about central banks as A general thing they have different functions and one of course is monetary policy And we've heard from sham said about this in terms of their quantity easing and asset purchasing programs The climate change affects that role in terms of the the price stability Inflation expectations, how weather events may be affecting Uncertainty in predicting and forecasting Inflation there's also the very important role of supervision And regulation which doesn't sit with central banks in all countries some countries the separate with supervisory authorities That's why the ngfs is also involved supervisors, but let's put that in there as well And and then the third area is the reserves and asset management and central banks Often we do a ranking of this every year and their assets are around 40 trillion dollars So that's a lot of money. They're big players in global capital markets And also through the reserves management practices They have climate change considerations in terms of how it affects the returns of their portfolios the liquidity and the safety of their reserves and so far the ngfs Has approached the the issue of climate change more through the financial stability risk angle And I think that's an area that we're really seeing change now And I think that's important because So far the line from central banks was that this is within our mandate because climate risks could become financial stability risks So what we are interested in is protecting the financial sector the institutions to supervise from this climate risk materializing and causing Financial instability making the portfolios of companies that we um that that are in the financial sector suffered We heard from chan said about stranded assets, etc And I think now the shift that we're seeing a little bit is that the materiality of risk can also go the other way So it's not just about What is the risk uh from an oil price collapse into the portfolio of a company holding holding an oil asset? But how is a company holding an oil asset contributing to climate change which can then be a risk to the whole economy So it's both directions and I think now with covet We're seeing that more strongly because seeing how non financial risks Can affect the real economy in ways that matter to the financial sector and how real economy risks Can become risk for the financial sector as well So I think we're seeing that change in mindset a little bit I think it's happening slowly But I have seen it in discussions with the ngfs That materiality is something that is questioned more than it used to be before Um, I think another change that we're seeing is that it's no longer a long term horizon issue It's something that is affecting uh is a risk that is here and now and I think with covet again, this is uh More important because we're seeing that these non financial sources of risk can materialize in very direct ways And could be a thing for the the short term and the medium term and it's not just something that Banks asset managers investors can put in their longer term planning horizons They have to account for this now Um, I think the other thing that is changing a little bit in terms of how central banks are thinking about this Is also the greater importance of transition risk and how do we deal with transition industries? And I think that's a very tricky point for them to to focus on because You can't completely divest from industries that need to transition that would cause financial instability How do you support industries that need to transition? How do you create a framework around this? What is the right model to do this? Do you do it through buying stakes in in uh, or equities as the state in these kind of industries and helping them move in a more sustainable direction If you divest from them completely if you're a reserves manager, um in a central bank does that set a leadership for Do you become a leader for others to do the same? We've seen some examples. Um, the swedish Central bank the riggs bank divested from municipal bonds from canada in australia because of sustainability concerns I said they are they're big players as reserves managers So divesting completely from certain industries may mean that you leave them up to investors that do not have the same Sustainability concerns to invest in and that could be both in the reserves management side or or in the asset purchasing programs I think the swiss national bank is a good example there because it's one of the few central banks that has quite a significant equity portfolio And according to some estimates the carbon footprint of the s and b's equity portfolio is almost as much as the Total households in switzerland. So it has a big footprint and and some are also mentioned the um the issue of market neutrality that is um That is very relevant to central banks. You don't want to be picking Specific industries when you conduct monetary policy operations, but at the same time the s and b and its equity portfolio in reserves Excludes the banking sector for example. So so there are some selection going on So you could you could argue that market neutrality is a more politically motivated Concept than something that that cannot be changed um, I think also the um The fact that balance sheets have expanded as a result of this crisis if you think about what central banks can do now There's even more especially the european central bank and it's as a purchase program So there is more opportunity to uh Align these with more sustainability objectives I think the other big trend in terms of what the ngfs is thinking and where the thinking is shifting is that It's not just about climate change And I know that in this discussion today we're focusing more on climate change But I think that is also important that we're thinking more holistically about sustainability About the sdgs how they interact and again covet. I think has accelerated That shift in thinking about not just climate change. We have to think about biodiversity We have to think about health as one health one planet And we also have to think about the just transition and making sure that by prioritizing Solving the climate crisis Those left behind by this transition are also Thought about and and it's it's something that is also covered in the policies I think in the very immediate response that we're seeing from central banks there is very very real debate and and balancing that central banks have to put between The need to provide immediate support to companies that may be facing insolvencies that require credit state guarantees etc versus putting green strings attached to To that kind of support and that's something both for governments and for central banks governments may be providing the more direct fiscal support But central banks are also through regulation supervision may have to face this dilemma as well We saw for example the bank of England postpone his climate stress test because it realized that Banking sector had a lot of other issues to focus on and it's a question of timing. It's a question of sequencing And it's it's communicating credibly that you are not letting down this agenda But you have to prioritize and sequence things in a way that was not anticipated before because of this crisis The final thing that I would put on the agenda is the issue of how do we actually Operationalize this how do we make it happen in practice? And I think there there's two main stumbling blocks as I see it One is the issue of supply of um of assets Through which central banks and more conservative investors can invest in to support sustainability So in the monitor policy portfolio some central banks own corporate bonds In the reserves management most are very much focused on government bonds sovereign bonds So it's very rare to see central banks invest directly in say sustainable real assets sustainable infrastructure or private equity Few central banks invest in equities So how can we have more supply of green bonds? For example, which is an asset class that central banks are allowed in their legal frameworks to invest in How do we package sustainable assets in this way? What market innovation do we need to see to have more? Scale of that because central banks also don't want to crowd out Private investors is a very small market that of green bonds has grown a lot Since the eiv launched the first climate awareness one in 2007 But it's still very small compared to the overall bond market. So we're seeing more issuance is there And the second stumbling block I think is about data Because how do we include data that can guide these decisions the common frameworks common taxonomies? Etc. So I'll stop there. I think there's a lot to talk about the the data issue as well But I look forward to to listening to the others as well. Thank you Thanks a lot and I this was a need very very rich Discussion and there's a lot of points. I'm I'm sure we'll we'll get back to Um, so let's turn to to nick nick I first met you in 2014 when you were organizing the the first big inquiry conference in in Waterloo And I presented a humble paper on the role of central banks in enhancing sustainable finance And even in that context where we had, you know, the the leading Sustainable finance people in the room There was a lot of skepticism regarding the role of central banks in in in addressing climate change uh being lead agents of of change in addressing climate risk and so on and um You were one of the few people who who were very clear that central banks really ought to play a leading role And they need to govern the financial system in this respect so A couple of years forward, where are we now? And where do we need to get to? well, uh, thanks early for that instruction is really great to to be on this panel and Actually really good to follow both shamshet and danai. I think I've set out very clearly the strategic agenda Maybe if I could pick up from where you started My sense is we could potentially look at the year we're in 2020 as potentially a hinge Year in the sense that we've had perhaps five or six years of central banks Acknowledging and increasingly starting to to act in terms of climate change and and the broader environmental agenda And I think recognizing how this fits with their existing mandates, but clearly not just because of Covid but I think that is propelling us forward recognizing that we have Let's say the next five or six years Could perhaps be as surprising as the last five or six years have been for central banks How few central bank governors in 2014 and 2015 would have seen Action on climate change as part of their their core mandates and Day-to-day operations, so I think we should expect that actually that the next five or six years could be equally surprising in in in in many years So, I mean one of the things we are facing now is the covid crisis And and I think what has been striking to to many of us is how quickly Many of the opinion formers around the world at the IMF at the ECB At the UN and so on I made very very clear that we not just need to sort of build back better But we need to very clearly orientates the recovery measures stimulus measures Around a green recovery around an inclusive recovery and adjust recovery and and the supporters of that have included central banks Which has been again, I think quite striking. So leaders from the ngfs And so on and that's one of the reasons why It was a pleasure to to work with you and my colleagues to not sound and decour the lse to develop this toolbox of crisis response measures which would which would enable central banks to make sure that as they were intervening to support the financial system and And prevent financial meltdown and support the economy in this crisis that those measures also did Point us in the right direction in terms of long-term action on climate change and broader sustainable development. So so that's Toolbox was prepared as a first first effort We've got three broad categories in there Monetary policy tools prudential tools and then other tools and we've done A broad review of all the measures that have been undertaken I think I'd like to build on what shamshad was saying earlier And I think dan I underlined that actually we have seen in the last three months a an incredible amount of activity for the central banks in terms of the utilisation of a variety of tools to Provide liquidity to markets. We haven't yet seen that directly linked to climate or environmental goals We've seen a continuation. I think of some of the forward momentum Philippine central bank, mexico, ecb and so on but no direct link as yet I think we see Quite a lot of potential for retrofitting some of these these measures And particularly potentially to site Areas such as the collateral frameworks adjusting those in light of climate and other environmental risks refinancing Certainly in discussions. We've had potentially quite a lot of interesting links between linking sort of green refinancing tools with SME access to liquidity Asset purchases and also then the portfolio management Tools as well. So I think there are a number of areas that central banks could could could focus on In the current in in in the current crisis and I'll send around a link to participants of that of that tool box But as I say, I think central banks are still really in crisis response tableization mode And the next phase perhaps the next three to six months will be much more about integrating their climate commitments Which they're making with their crisis response If I could maybe look ahead maybe to the next five or six Six years and then some of the sort of characteristics we might want to Think about One of the striking things if we're talking start about climate change Is one of the three goals of the Paris agreement as many of you will know Is to make financial flows consistent with low carbon development and resilient Development in line with national development priorities now At the moment, I think a number is not clear Whose job it is to make sure that that goal is implemented clearly that sits with finance ministries But in many ways it sits with central banks and also other financial regulators And supervisors So I think then one of the areas as we are now focusing particularly on the net zero goal Will be a clear sense of central banks coordinating with treasuries and finance ministries is What part of that goal within the Paris agreement lies within their Responsibility in terms of making sure financial flows are consistent with climate security Perhaps to to build on this. I think one of the areas will be to understand The central banks. What is their relationship to the net zero goal? Certainly in the uk as part of the proposed stress test from the bank of england There was a a set of set of scenarios for for for banks and other institutions to test themselves against but also a requirement for individual institutions to Come forward and and and provide the global warming potential of their portfolios banks insurance companies And others and the bank of england themselves have just published their own global warming potential for their portfolio I would see increasingly over the coming years central banks being very clear about what role they have to achieving At net zero goal and the reason would be very clear that that that achieving net zero In line with 1.5 degrees Celsius by 2050 Is one of the best ways that central banks are going to be able to Deliver their core financial stability goals all the evidence I think is showing very clearly that Warming beyond 1.5 degrees Celsius will put quite severe pressure and make it very difficult for Central banks to deliver their financial stability goals Increasingly, I think we're going to be seeing far more disruption As the decades go on if we allow a hot house world to develop the scenarios published by the ngfs This week pointed to a 25 percent Reduction in in GDP If we go ahead with Unrestricted global warming in developing countries the poorest 40 percent of countries in the world That rises to about 75 percent. So clearly fairly catastrophic for the development potential of the majority of of the world So I think that sense of saying the role of the central bank central bank has has a role in delivering net zero to achieve financial stability Potentially will be one of the characteristics of the next five years. The second is then that clearly there's been a lot of Progress in terms of setting expectations of regulated firms in terms of improving disclosure requirements stress testing so on But I think we're close to the situation where on a precautionary basis We could start see adjustments of risk weights, particularly for high carbon high risk assets, particularly coal Which we know as a global market has already peaked a number of years ago And therefore faces substantial market risk as well as as climate risk So I think that will be another aspect as a complement alongside these sort of data and disclosure tools Dan I also already mentioned this in the the network for greener financial system is greening So that is obviously thinking about issues beyond climate. So air pollution water pollution soils Nature and so on and I think that is one of the issues that kovat has taught us is the integrated nature of climate and and the broader natural capital issues, so I'd expect Central banks to to expand their focus to that broader range of the environmental agenda and then also to The the the social aspects of the transition as well and and I as mentioned this and also early in euro marks about This question of the just transition a number of central banks do have dual mandates stability mandates As monetary authorities and also an employment mandate And I think there would be some interesting roles for central banks to play to ensure that The recovery and transition Is is not just fast and stable and orderly But also is fair and just from an employment and an inclusion point of view and then the fifth point perhaps Is the question of the the the assets that central banks will hold on their balance sheets Dan are you touched on this? But I think there's a very interesting role that central banks could play particularly in the sovereign bond market Obviously that that comes back to the question of fiscal monetary coordination But one of the things that I think is very clear is we have the beginnings of a Disclosure regime for corporate assets, but within the tcft. There is no similar or equivalent disclosure framework for sovereign bonds and I think both private holders of sovereign bonds and indeed official sector holders of sovereign bonds would increasingly need to see Disclosure frameworks around that not least if you're trying to achieve a net zero goal And I think that it could be some very interesting discussions between sovereign bonds as purchase sorry central banks as purchases of sovereign bonds and Their finance ministries to increasingly ensure That all issuance of sovereign bonds is aligned with the paris agreements and with the sustainable development goals So that's a really a clear objective that we're moving as the niche for sovereign bonds greens of sovereign bonds Into the main the mainstream. So those are sort of five areas. I think that could characterize one central banks recognizing their role in achieving that zero from a financial stability perspective precautionary tightening of risk weights particularly around high carbon assets extension to the nature agenda the just transition and then the sovereign bonds and I think that that really is a closing point is A question really about the culture of central banks this question of The conventional wisdoms obviously these are very important For the the integrity and coherence of central banks this question of market neutrality How does that sit? When we are in a situation of profound market failure in the case of climate change and other environmental issues and then I think Really an issue will be around The capacity the skill sets the behaviors and indeed the professional culture of central banks So that these issues are not seen as as marginal But really core to the the purpose of being a 21st central central banker. So thanks very much Thanks a lot nick. I think the the your closing point about the the culture of thank central banking is really a key one and And I think that's also something where where adam can follow up nicely Adam as an economic historian I think you can give us a bit of a long-term perspective On how central banking has changed over time And and what changes may Lie ahead of us So as we've already pointed to central banking is not just kind of one set Of principles that that it is changing. There are different central banking cultures How do you place the current changes we may be seeing in this bigger picture? Well, it's a pleasure to be here all the hope you can hear. Okay, is this working? Okay, excellent And to be on this under this panel with people who have debated much more of their career to actually engaging the central banking than I have And so I really I feel come to the conversation somewhat as it is an outsider But as a very concerned and interested commentator and one indeed who does Be the current moment from the point of view of a historical Perspective which in the case of central banking in its modern form has to go back half a century to the to the 1970s at least Um, but I thought I would start by simply in relation to the questions that you asked us Only about what we think normatively the objectives of central banks ought to be at this moment I think the fundamental question is how urgent do we think this problem is And how urgent do we think key decision makers think this problem is? and I think the answer that nick and danay and shamshad have given us is that People are beginning to wake up and smell the coffee There is a sense as then I put it that this isn't a problem of the long term or even the medium term But this was an immediate problem shamshad has described, you know In essentially a generational experience of coming to terms with this and nick has obviously been a driver of that But I think from all of them also we got the simple message that the trajectory that we're currently on is disastrous So, you know the bias in all of my answers to the questions that only posed is we need to do more We need to do it more urgently. What we're currently doing is not enough. Whatever we're currently doing is not radical enough as Remarkable as it may be that we're even in the place that we're at and clearly It has been a spectacular change over the last five years in what central banks are willing to do on this agenda But that has got to be the premise is that, you know, whatever we're doing isn't enough because the current crisis is is spectacular and and Is coming towards us with absolutely enormous speed and on a huge scale and clearly this is a global problem and so It's coming as I do from an advanced economy kind of background We have to absolutely step Beyond the shadows of thinking endlessly about the mandates of the ecb or the troubled history of the federal reserve or whatever Because this problem needs to be tackled at least at the g20 level globally And so we need to have resets in the policies of all of the major global central banks the g20 plus basically a key To making this work if it is going to work. So I think those will be two preliminary statements Um, the next kind of preliminary kind of remark I would make is when we say what do we want to change about central banking Um, perhaps it would be useful to think about what the paradigm is that we want to shift and and Dana and nick in particular spelled out in in detail as it were what the elements of the moves are and there are certain key terms that recur Neutrality being one of them and I think that's not haphazard That's not coincidental right because the modern panorama of central banking the possibility of talking about global central banks in the way That we are here Is the result of the rollout of a particular type of central banking in the 1990s across the post cold war world And the adoption of that paradigm and that paradigm had certain Certain key ideas that were linked to it and they form a structure And the question is how can we shift this and what is entailed in shifting this structure? And I think the key terms and they'll be familiar to all of us who are involved in central bank discussions at any time are independence As the absolutely sort of bedrock of what central bankers are which is why we can talk about them as a group They are an entity and they have independence one could discuss what that actually means Part of their independence and part of their license to be independence is they have a limited remit And classically of course that was inflation fighting and that's why they were independent Um, and then as danai has pointed out their actual roles have proliferated dramatically um They also profess neutrality and I think that has a double edge in other words. They're they're not picking winners They don't engage in the sort of crypto industrial policy and they are also As danai was pointing out managers of the global system So they don't engage in various types of classically anyway the 1990s paradigm central bank does not engage in foreign exchange controls or capital controls So that's another aspect of its neutrality And all of that then licensed and this is where we wrap back on the notion of independence All of this was written into something that we refer to as a mandate Which is essentially if you like the contractual delegation to this group of Technocratic non-elected officials of certain tasks by whoever the political sovereign is And classically paradigmatically in an advanced economy context. This is a question of the delegation of democratic authority Of course, not all states are democratic and so in those places independence might mean something quite different It might mean for instance, I don't know independence or a kleptocratic elite in the eyes of the IMF But classically the central bank independence paradigm is delegation from a democratic sovereign So this is tied up quite tightly with the wave of democratic change that happened across the world in the 1990s So when we talk about shifting the mission of central banks in relation to climate change I think the question that we have to tackle and we ought to tackle it as it's directly as we can is Which elements of this package do we want to shift? And often when you make proposals about green Addender to central bank policy, you will find a kind of double edged pushback, which is You're threatening our independence. You're widening our mandate too much Or you're empowering unelected Unelected technocrats to do things that they really ought not to be doing And I think if we're to avoid That kind of opposition on what needs to be a journey of quite radical change We need to tackle that head on but before I go there because I think that's ultimately a political question And that's where I want to end up. I think we also need to address and both In fact, everyone has spoken about it But I think we need to address it head on which is the neutrality has to fall Neutrality is one of the anchoring ideas which basically allowed massive central bank policy But within a frame of market conformity Has to be problematized. We need to question what it means We need to ask what authorities license what neutrality is often it's tied for instance to rating agency evaluations We need as nick was saying to question What What neutrality means with regard to markets which are exhibiting absolutely catastrophic market failure or just non conformity with the announced targets of The government so if we're on we're trying to go for decarbonization and we're aiming for a 1.5 degree path And as we know from the work of park karni and others the market's a pricing of four degree world Is there not then a mandate of intervention? So I think neutrality is one of the principles that Has to be questioned directly. This is whereas it were things will get difficult in the conversation And where one can imagine resistance coming because neutrality was a key element In the package of central bank independence from the early 90s onwards Because it suggested the central bank was not going to the illegitimately muddle mess around with market judgments We can't we don't if we take if we accept that we are actually in an emergency situation And if we accept that we're there in part as a market failure We can't as it were then also go along with neutrality But let me come in concluding to what I take to be the absolutely fundamental point Which is that we need to think about the politics of these actions And we need to think about the politics that you know What is it that we're actually asking central bankers to do and how are we legitimizing them to do it? and I think there's a there's a sort of Lack of clarity here in part because there's a lack of history as to how this set of mandates emerged And in some cases they were kind of consensual in some cases They were foisted on countries by the requirements of external lenders who demanded that central banks conform to international standards in the core countries The advanced economy of countries the europeans and the americans independence is actually the result of manifest social and political conflict In which the central bankers adopted positions which were antagonistic to the interests of considerable groups in society The most classic instance is paul volcker's shock in 1979 this ruined the american labor movement It did huge damages to large parts of the American manufacturing industry. It's why the idea of neutrality Spacks rather oddly in the mouth of anyone who knows anything about the fed's history. It has in fact been a powerful transformative actor Now I think one of the things that we need to be clear about in thinking about central bank's role with regards to the climate problem Is what vision we have of Change, I mean is it one in which NGOs and activists push reluctant central bankers To adopt mandates. They don't want to adopt in which case. What are the levers that we have to push? What are the things that we need to have to take away or add? Does this come from parliaments saying to central bankers we're changing your mandate? This is what it's going to look like do we have a model of as it were consensual elite change Which I think is what most of us are most comfortable with and many of this in this group will embody Or can we conceive? What are the circumstances under which we might consider it legitimate for central bankers to play what has been their historic role? Which is to do if you like a volcker style shock Which is to say no we're changing the terms and yes I as an unelected official with the mandate that I've got consider myself Legitimated to radically change the terms as we have done in the past and that is what in fact found it myth of central banking in the past That's very uncomfortable and it's quite problematic And it evolves a degree of myth making because it involves burying some of the casualties under the carpet later Which is what has happened very much with the core volcker legacy But I think if we're going to think about how serious this crisis is and how urgent the changes are that we might need There might be a case for thinking seriously about what that kind of technocratic leadership on these kind of issues would look like How you would create it politically is a different issue How you would legitimate it is also quite problematic But it would certainly no longer be the model of a kind of consensual technocratic change Which I think we hanker after too much and if this crisis is as urgent as it is We may need to abandon too Now this was a real tour de force adam. Thank you so much and and I think you made very clear that Uh tinkering at the edges. You don't really consider an option so I think you raised a lot of questions that I'm not very often raised in in in these discussions, but but Which I think have to be addressed really so I would like to invite The other panelists are kind of all panelists to to do one round. So starting in the same order um to Ship in comment on on what your fellow panelists have said agree disagree Raise new questions or answer questions that others have asked or not asked Um, so let's do a quick round And I also encourage Our audience to to send in Questions through the chat function Uh, so we can bring them To the panel Shamshas, um, do you want to? Do Sure add a bit more right, um I think it was a fascinating to hear all of Colleagues out here the panelists and everybody Uh distinctly brought what I would call additionality to the debate um, and uh, I think uh I'm struck by What I see is a lot of agreement with Each of the panelists and let me start with, uh, Denay who was Dot on I think, um In I'll just pick up one point Which was related to How central banks invest From their balance sheets or the reserves that they are custodians of at a country level um, I think This has been my Issue two that You know, you have to lead by example and if central banks are going to Enter into the business of seriously supporting climate finance And we are talking about Huge amounts that will be needed for climate finance if covetous any Um example to go by which is of a smaller scale Um, in my view relative to what Climate change will bring and I speak Based on experience of the disasters that I have personally confronted and Been there as a part of the rescue team That you know, when you have a disaster climate change related disaster or whatever disaster You basically see everything wiped out Everything wiped out on the earth Now you can't stand back and say This is my mandate or not my mandate And we need to deploy all the alternate funding sources we have And central banks now After a few rounds of crisis Have been equipped with a lot of new Way of thinking new tools new instruments. So we should do more innovations and Given the size Of the holdings these central banks have now I know what central bank reserves mean and what balance sheet of central bank means I mean, we're not talking about that it's not central banks balance sheet. We're talking about bigger central banks balance sheets and it's not that Aligning yourself with sustainable finance will destabilize the financial strength of Of a of a central bank it would actually reinforce if the sustainable Finance transaction is done effectively and that's why you need Very high-powered climate scenario analysis to be able To relate to investments that you are undertaking whether it's big money from institutional investors or big money From central banks. So I do feel central banks need to lead by example By deploying their own funds and I as I said, they have missed an opportunity Because this asset purchase program was another example And if you look at the first round of asset purchase program of EU It was invested almost 60 percent of it invested was invested in the high polluters Rather than so we didn't even take care To screen What assets we were investing in so I think they have a moral responsibility whether they have a mandate or not, you know Legal issues are signed. They have a moral responsibility. So that was a point that I am totally in sync With dana then Nick has touched upon several things And but I'd like to share with you a little from a developing country context Now, obviously ngf has emerged As is a body and imf is also An observer has an observer status. There are lots of other entities that are supporting ngf So it's a coalition Which is a coalition of some of the advanced countries or emerging market central banks Now, what do you do with the developing countries? Now the sophistication That's going to come From ngfs is a very welcome development because it is talking about Means streaming The impact of climate change in the decisions on monetary stability I mean, it says it in much more sophisticated manner because our audience would be Also people who may not be an economist So I'm trying to translate this because I think climate Stuff has to be talked about in a simple manner so that everybody understands So if the if we agree that Climate change Has to be also viewed as a monetary stability and a financial stability I think that we have to really be Looking at what different buckets of central banks can do because there will be a lot of diversity What may Work for say Europe may not necessarily withstand when you come to a developing country And let me make this point a little more clear There are of course a wide array of Prudential regulations that have already emerged And they are giving weights to the brown assets penalizing them and giving positive weights so to speak on incentivizing the green finance Now that's the track that the Low-income developing countries have opted for so there isn't a major Formational mindset that has occurred and I bring this that why we are talking about big debates About the mandates. It gets more complicated when you have ECB, which is the conglomeration Of like several central banks, but when you have an individual small central bank Irrespective of what the legal mandate was it was doing all this stuff that is now being taught as very innovative Refinancing I used to do it Okay, refinancing It's it has an impact on monetary stability because monetary easing Aggravated the modern macroeconomic and caused a lot of macroeconomic complications But refinancing is rampant Uh in in developing country context. It may be a new thing relatively, but it's It's the bread and butter Of the developing countries because there is more fiscal space to stimulate the economy or to to Or also with the banks. They don't have the liquidity providing liquidity support to central banks. What is it? We can say it is a mandate of the central banks So that the banking system doesn't get destabilized But you know, I mean what did we do during the financial crisis? Loaded a lot of rich banks With the liquidity who was paying for it taxpayers. So the central banking business has changed and uh, you know, this historical Discussion that adam had is fascinating and I hope that we can read some of his stuff. I haven't actually read his stuff But the bottom line is central banks have been doing community programs central banks have been doing everything On sun and earth different central banks have had different strategies so I think we should try to push the envelope regarding the mandate a little bit because When when you have climate disaster Then everything is else is at stake. I mean when I was in indonesia. I was actually in a director in uh Context of Sorry in uh, um, I was very much worried about what was going on when Everything was burning as a result of the crisis that we all faced during the disaster in indonesia And everything was burnt when you went there And it was a lot of Important people who went for the rescue Everything was burnt. Now you could have different debates saying should I do this and should I not do this? Should it be funded from a fiscal support or should it be funded from the local or municipal government? No time 30,000 life bodies were buried in a in a hole that was just Banke Moon was there. I was there from Asian Development Bank We were just thinking on how to handle this crisis Which was a disaster all the land all the oil everything was there. So I'm saying we need to prepare most of my Comments that are when I was writing. I think Prevention and preparation is important and every time as I said when we have a crisis everybody says Oh, we have we need to we should we knew about it, but we haven't prepared and yet We go ahead and provide pretty generous Kind of Pretty generous liquidity for variety of reasons. So I'm going to stop here There's a lot one can talk about climate change and how we need to do things differently And how climate finance would help, you know, all this Work that's being done on the regulatory frontier is fascinating Because after all we've all gone through the puzzle how to standardize Basel for all types of economies and developing versus developed countries. So standardization, of course, will eventually help in but also Figuring out how do you manage risk and return in an effective manner is quite critical also Thank you. Well, thank you. Shamshad again some very profound points and I think um, you're highlighting that Uh, you know, there isn't in fact this one central banking model is very important and even though As adam rightly pointed out there has been since the late 80s early 90s this kind of inflation targeting um model that was promoted also by international financial institutions around the world and many countries have adopted this but um, there have been indeed very different central banking traditions And even though quite a lot of central banks in developing countries adopted inflation targeting targeting on paper in practice There has been a lot of much more pragmatism because Also the the immediate needs for central banks to support Say financial market development or kind of industrial policies of governments And also issues like financial inclusion have been always On the agenda in in most developing countries. So I think that that's a very important point and of course again uh, the the emphasis that During crises like right now. We're facing right now Things are possible that that we're just, you know, We were told are not possible before so But let me turn on turn over to to Danai to to add her second round thoughts Thanks, Uli. Yeah, it's been fascinating to hear everyone speak. I've learned so much from all of you. Thank you I'm conscious that a lot of questions are coming through. So I'll keep it brief because I think these are also really interesting I've been looking at them. Um, I'll pick up on just one point and I think Shamsa also mentioned it and when I talked about the The kind of different roles of central banks monitor policy supervision and reserves. I think we can add a fourth one, which is the showing leadership in the area of financial Markets and kind of acting as role models and really driving the agenda because of the expertise They have more than the tools as well and kind of showing the way and and work together with other central banks globally I think the angiophysics is a good example there where perhaps we've had less progress on the government side And I think the standards and taxonomies is very important there and and nick Pointed it this out about the kind of brown and risk And green risk asset weightings and and Shamsa mentioned it now as well And I think when we think about the green supporting factors or brown penalizing factors green and brown taxonomies What can the role of central banks be there? Again, it's a very difficult question for them because they're saying well, we don't have enough data to show that green Is risk-free so we don't want to be Lowering capital requirements for a particular asset class when we don't have the evidence And I think the big question there is will we ever have the data to be able to do this? Do we have enough time to wait for it? How do we resolve that dilemma? And I know that's kind of in our community more on the academic and watchers side the brown penalizing factors and brand taxonomies are perhaps more Popular but on in the banking sector you see the kind of green supporting factors being something that That that is being argued for and in china We've already see it happen And I think the the elephant perhaps in the room is also a very big political jurisdiction where the climate agenda is not as much Advanced and when you have a big capital markets players that that is lacking in these standards Then you will start to see the market developing their own because if you don't have that leadership from from the regulators from the government and you you know investors Investors know that if my central bank or my government doesn't care about this But the ecb or the bank of england does and i'm operating in those jurisdictions as well I have to do something about it Then they will start coming up with their own standards And I think that's dangerous in terms of the fragmentation that we may see I think central banks have a role there to kind of resolve that a little bit. Yes, we have different Um different settings in different countries and it may be the political preferences It may also be the different ways companies and financial systems are set up Say more state-owned companies in china versus different different setups in other countries So you do have to have a little bit of difference But I think that fragmentation versus Fragmentation versus harmonization is is a difficult thing for for central banks to resolve And when you read at the the very first and gfs report that said Well, we we don't think the ratings agencies rating sufficiently Cover the the risks the climate risks in the in the assets But at the same time they use these ratings for their asset purchase programs Then again, is there a room for central banks to develop their own or what progress can they expect from ratings agencies to to be able to to Guide them in their own asset purchases. So I think that is another interesting question going forward, but I'll leave it there because I see more questions coming through Thank you, Danai Nick over to you Thank you. I'm fascinated to hear how Adam's going to answer the question about nice and green technocracies. I know that's waiting holding out for that one Um and lots of lots of good good points if I maybe pick up um From the from the chat some of the comments york harsh commenting on carbon trackers latest decline and full Report about the the the energy system and that's why I think this this question Maybe is again the way how we present this issue of green and climate and so on that often I think it's it's could be Could be seen by some of the by central bankers who obviously are busy with many things as being Outside of scope because it's largely a sort of ethical or moral issue But if you look at the scale of the transformation in the energy system That is now underway with tens of billions of impairments Happening in in recent recent days and weeks with the global coal market already peaked the oil market probably peaked to and gas coming Coming soon Then these are going to cause quite sort of systemic disruption so I think there's again if we are focusing on some of those core and very sort of Core issues which really go to the heart of of economics and financial stability Then I think there is a case for precautionary action now and then on the other side Again as champ said I've been saying particularly for developing and emerging economies thinking about the the the impacts of climate change already which already are hitting gdp and and and well-being One of the themes that comes out in the question. I think from uh an uh lurcher was about how climate risks can be picked up in sort of sovereign bond Ratings and how that is compatible with questions of just transition. I think well the uh piece of very fine research You did a couple of years back Was showing in a sense that there is a a paradox that as markets Become aware of climate risks and start crystallizing those in For example in in credit ratings and other forms of of capital pricing Then actually particularly in terms of physical risks That could mean that the cost of capital for developing countries actually rises that these countries Least uh contributing to the problem most exposed and because of their vulnerability They are actually facing rising cost of capital. So again, that suggests potentially At a at a global point of view, but also maybe nationally The purely thinking about A market only Way of integrating climate risk is going to generate issues about economic and social Justice in terms of how those aspects are addressed and pick as well also Pointed to this issue of inclusive and just transition I think that is something that we will be working on certainly at the LSE and would like to work with others Really thinking about the the sort of how the so maybe the employment Aspects of some central banks can be matched with this climate climate issue Leave it there. Thank you Thanks, Nick. Ed, I'm over to you I just wanted to start by saying that um, I absolutely loved shamshad and the earliest sort of pushback on a excessively advanced economy Focused discussion here. I take that point. Absolutely. I took it to be implicit in what I was saying There's something extraordinarily artificial and historically aberrant about the construction of the 1990s advanced economy central banking paradigm Because the bank of england used to do all of the things that we're talking about too The bank of france was doing them down to the 1980s picking winners doing various types of industrial finance the the I mean to use a slogan as a cut it short basically The the central banking paradigm i'm talking about is particularly a version advanced economy in the unliberal neoliberalism that gained to gemini in the 1980s and 1990s It was always a bad description of what central banks were going to do in the most of the world It has broken down in the advanced economies And it's a historically brief ellipse and my point is essentially let's free ourselves from that So that we can as it were in a much more pragmatic way Simply ask what we want to use this incredibly powerful tool for but we should recognize that that involves overcoming What are now quite entrenched notions and indeed in the european context entrenched legal conceptions That do need overcoming Um, so I completely decor in terms of post-colonial criticism This would be as it were a move to provincialize The bundles bank or the federal reserve model and that would be that would be indeed what we should be doing And clearly the you know if on the one hand has done a incredibly Um tactfully remarked there is a missing elephant, which is the fed the other end of the spectrum Of course, there was the people's bank of china the new game in town if you like That is a completely pre-liberal post-liberal just non-liberal actor Which mobilizes the entire resources of the massive chinese power apparatus to do whatever beijing is pushing and to manage all of the insuring problems. So This I think is exactly the space that we need to be in a discussion about central banks beyond the pieties of the 1990s And the more quickly we can let go of those the better And as much as I have respect for the likes of mark carney The limits of his reform program are precisely that as it were he is One of the great exponents of that paradigm and that does constrain what he's going to be able to do The most the the nub question and nick pointed it out that daniel agar or Unsurprisingly put to me from there from the audience is okay So if we're going to do this like if we imagine ourselves a green paul volker Um somebody who will break things and move fast because he understands there is a crisis and therefore this is a historic turning point and where Where is the action here? Where where does that energy come from? This is indeed the crucial question And I don't know that there's a good answer and to that extent this suggestion is to some extent a Uh a council of despair and I I would I would admit that why Because we have to be clear about what the very powerful interests were that sat behind that paradigm that emerged over the course of the 80s and the 90s It's not just something that was spun up by a group of technocrats Or it was simply the legacy of german neoliberalism for the middle of the 20th century This after all is the counterpart to what other people using another slap-dash term know as financialization This sort of central banking is the counterpart to the hypertrophic growth Of the financial sector and those were the interests that broadly speaking it helped to instantiate Daniela refers to you know capture and the problem of greenwashing That too is the the demon that needs the monster that needs slaying And it's not obvious where the political forces for that kind of reform program come from at the same strength and with the same capacity that they came out of conservative politics and You know Neoliberal versions of social democracy in the 1980s and 1990s So it's not clear to me that we do have a good answer for that And to that extent we may be involved in various kinds of improvisation To get us through this phase of crisis and they may involve the kind of thing that yurt referred to You know sufficiently scary reports may convince powerful people that they do indeed have an interest in moving Because things are going to break big things are going to happen whether you like it or not And you may need to be ahead of the game But I think that is the political challenge and dan a refer to it in a question she posed as well How do you build the political constituency powerful enough to say We are now going to change the mandate we want to change the terms of the central banking paradigm And it may be because i'm coming from the united states where this question is completely open and the politics are very bare knuckle and the basic principles There is no consensus But I think that conflictual element is what I want to put on the table There's a sense in which the conversation in europe and in the more sophisticated emerging market and developing world actors is too polite Um because it takes to granted the level of agreement That is not there in The rougher edge places in the world and below the surface may also not be there in some of the More biampons on corners and when the going gets tough and the choices are more difficult That resistance will remanifest itself in in the sense that the you know Neutrality will be a harder principle to give up than people imagine and it will be harder to as it were penalize Broward assets than to stimulate green assets and this is not by accident because powerful interests are engaged So I take the force of the point. I don't really have a not easy answer for it but the the suggestion from history is that we need to encompass the full range of possible actions that central bankers have taken and those include this kind of pioneering ice breaking role It isn't just simply give us a mandate and then we'll act as good technocrats. There has been politics there And we've given the urgency and it goes back to the original move is the crisis as urgent as we think it is Then do we derive legitimacy from that? Are we willing to do a ends justify means type move? Because if we are is the climate crisis as serious as we think it is Then how can we escape that kind of logic? um That is, I think, you know the the question that because somebody like Paul Volcker certainly believed that the ends justified the means so um Vojtek Kalinowski suggested that maybe Christine Lagarde maybe the new Paul Volcker and that she she's actually not an economist And that she she really is a political person. So I mean that remains to be seen um But it is indeed interesting to to to note that quite a lot of people who have been pushing the climate or sustainability agenda in the central banking space are not economists. So if we think of Frank Eldersen, he's a lawyer, you know, the chair of the NGFS and and um So maybe maybe it actually takes a non-economist to to who's not brought up in You know, kind of this rather narrow thinking about central banking to to make this change, but So we have a bit of a problem now in so far as we still have a lot of very good questions but we have only nine minutes left and I would like to use these nine minutes to um pass the floor again to each of you for a very quick comment on what you think needs to be done now, so uh be either kind of in very uh short-term thinking or kind of do we need kind of a new Bretton Woods where everyone gets together or whatever, but so what are the kind of if you could take one action to bring to the central bankers agenda, what would that be? And I maybe start again with with Chumshat Chumshat, well Or maybe maybe someone else what wants to to have a go If Chumshat I don't know Yeah, I can come in and also just comment on what you said about Christine Lagarde because I think it's a really interesting It wasn't really interesting appointment And we knew that the ECB was political before her appointment I mean a lot of the the euro is a political project and we saw that throughout the euro area crisis I think her appointment confirmed what was implicit and made it very explicit that you um that you That a lot of these discussions are political and I think it opens the way to thinking about these issues that as we've discussed uh require a more political change in minds that I think you mentioned lawyers Politicians, I think Bringing in more scientists into central banks is also an important action point and how we can create more multidisciplinary teams because a lot of this understanding of climate risks and the Interpretation of data of climate scenarios you need to have it's not just greenwashing in terms of the products There's also a lot of competence greenwashing going on You know, do you does that mean if you're an economist and you do a short sustainability course that you're qualified to kind of Be part and make make these decisions. How do you integrate? The different skills that you need so I think that would be one action that central banks can do I think in terms of the the monitor policy side We're seeing some strategic reviews the ECB is having a strategic review coming up How you can integrate climate risks there and I think the the other change is what I mentioned at the very beginning It's not just about the risks to the financial sector is also the risk that the financial sector can have On esg issues And it doesn't mean that as long as the financial sector is safe and the planet is being destroyed Central banks are going to be okay with that and I think that shift in in how they approach the issue Needs to happen because what we've seen from the ngfs so far is that it's within our mandates because they're financial Stability risks and I think we need to move beyond that And I think it's a big question how we allow them to do that in a legitimate way But I think there is a lot of scope and flexibility in the in the way their mandates are set up I mean if you think about Price stability you can bring climate change into this if you think about reserves management and the need for safe Safety and liquidity and returns there then again, you can bring that in so I think we've seen a lot of progress And I want to end on a more optimistic note because we've said about what we're not doing right and the kind of political problems and the blockers But the progress that we've seen from central banks in this space I mean the ngfs from being set up in december 2017 to now has grown to so many members has published so many reports It's much faster than other financial regulations that we've seen before when you consider kind of how slow the basal committee On banking supervision has been on on other standards since the previous financial crisis I mean we should also give some credit to kind of the dynamism that we're seeing in central banks and hope that this will be accelerated even further Well, thank you, um nick do you want to go next? Yeah, thank you. I mean, I think uh, maybe it seems a little bit sort of narrow, but I would think uh, it would if there was one thing Uh, central banks should a adopt a clear policy on their role in delivering net zero from a financial stability way Financial stability perspective and I think that fits with this dynamic of let's say sort of reciprocal signaling that's has been going on in the sense that the bank of england moved When it was clear that there were access in the financial system banks and insurers and investors Who recognize that they actually could not respond effectively to climate change because it was a systemic issue And therefore you did need both action but in the real economy But also action in the finance system Large pension funds asset owners banks are adopting net zero goals And actually the central banks need to reciprocally adopt goals themselves and I think pursue net zero by 2050 as part of their financial stability objective They clearly can't do all of it or indeed most of it That that lies with with finance mysteries and the real economy But they clearly have to have to set a very clear sort of sign about that That's the target they're aiming for and then I would think many many other things Will follow after that. Thank you Thank you, nick and I think that also resonates with a comment by york harsh who pointed to this climate tracker analysis and basically suggesting that if if any of that is true and and the financial risks are As big as portrayed in the climate tracker report them. Certainly financial stability mandates Will deliver a deliver a lot of scope to intervene and My personal interpretation would also be that I mean even if we look at the ecb The ecb mandate does indeed provide a lot of scope So I think it's not only about legal mandates as in their written form But also very much about interpretation So and that that is basically also very much linking to the point that that adam made about A paradigms and Because I mean if any any lawyer knows, you know any legal text you can interpret in In different ways you just need to make sure that that you interpret it in a watertight way Okay, that's kind of an economist take now on law. But anyway, adam over to you I think it's telling that both j pal and legard Alloys, um, we're in a kind of post wonk Um central banking world right now As far as those two are concerned. Anyway, it's quite a it's no longer the world of the ben ben anki's And the mervyn kings and so on which is An indicator of the way in which the paradigm of central banking success is changing one one thing I mean, it's it's a version of what both nick and danai have said, which is I think we should We should abandon the principle of neutrality Uh, we should be a formal statement of of intention Which is that we are indeed going to select against um Brown assets and set a clear indication of the the move that's as it were the soft version of the green balka is You know, there there are going to be winners. There are going to be losers. There are certain modes of of Production and the energy generation that we do not favor that we disfavor and that we are no longer going to support in any form directly or indirectly And push in that direction. So that would be the kind of simple statement of principle. That's one of the principles that's got to go And trying to sort of shoehorn arguments around that is self-defeating. Which is just quite clear about the fact it's supporting them brown assets directly and directly is inconsistent with other commitments of That have been democratically legitimating the that clearly in the interests of us alive I think that that is something that that probably all of us can agree on I would just like to add one point Um, and I don't want to come over across as as lecturing but um, I very recently read a very good article on on the use of brown assets in in this sustainable finance space and um, so it was pointed out that You know this the use of brown has a certain racist connotation And so I myself have come to the conclusion that I will not use this term anymore And uh, I never even thought about, you know, what's the proposed alternative? Well, I mean that that actually has been a lot of discussion. I mean dirty Assets, uh, somehow dirty sounds great. I'm much happier with dirty too By all means So I think that that's I mean that that is just a small semantic change But I think that actually is also an important one because it also points to Yeah, you know kind of everything's connected and and you know, we we we touched a little bit on on just transition so central banking And and you know, what's happening in central banks has a lot of implications And so there's the environmental consequences and social consequences and I think There's this notion of neutrality Um I think that probably everyone on the panel Here will agree is is very problematic and and my take is certainly that Central banking has never been neutral. I mean even simple interest rate policy Has distributional consequences so there are Market neutrality, I would say is a fallacy and and as nick pointed out Was market with was climate change as a bigger biggest market failure ever as as lord stern put it It is problematic if if central banks and supervisors Cling on to this concept Okay, time is up now. I really would love to continue this exchange and and also bring in more of the questions because there have been really excellent questions in the chat We won't have time to do that now But I would like to thank all of the panelists for sharing their time sharing their insights I think it has been a very very good discussion. We will make this available online So also people who could not sign up because we were actually oversubscribed Could could watch it and I hope it will Contribute to a discussion that I think we really need to have on the road of central banks Their relation With the political space And and all these very political questions that that really are important to address this very urgent problem So, thank you very much. We will close now and This is to be continued. Thank you. Bye. Bye. Thank you. Thank you Thanks all