Furthermore, unlike other asset classes, there is no limit to the volume of sovereign bonds a bank can hold from its home country. This has forged a close link between the solvency of countries and the solvency of their domestic banking sectors. And this link is even closer today than it was before the financial crisis in 2008.
Financial Risks from Climate Change Before I move away from the discussion of making banks safer, let me say a few words about the potential risks to banks posed by climate change. As our nation, and the world, grapple with how to respond to climate change, banks are increasingly focused on the risks that climate change brings to their balance sheets.