For example, we are currently working on a concept for the Supervisory Review and Evaluation Process, or SREP. The SREP is the most important tool of banking supervision. The supervisors analyse each institution’s business model and governance, as well as its capital and liquidity risks. On this basis, national supervisors determine how much capital each individual institution is required to hold.
For this reason, central banks support transparency and the disclosure of data that will enable markets to lead the transition5 so that, with the right information, they can price in the cost of doing business, the climate risk, and, most importantly, evaluate new business opportunities.