This can entail significant transition risks for carbon intensive emerging and developing economies which lack domestic investment resources and fiscal policy space to cope with this challenge. 4. Financial distress o Physical and transition risks can have significant direct, indirect and contagion effects that need to be addressed promptly by financial supervisors and regulators to avoid systemic impact. QUESTION 2.
Banco de México is a founding member of the NGFS. What do you think should be the approach of central banks in emerging and less developed economies for financial institutions and markets to price climate related financial risks better? We have established a solid institutional framework to foster this agenda.