The financial system also plays a critical role in helping households and businesses manage new climate risks. This includes both the physical risks associated with more extreme and more frequent weather events and the transition risks related to the revaluation of assets and the reassessment of projected earnings. A stable financial system is one that is itself resilient to these physical and transition risks.
First, the relative importance of bonds and deposits: deposits very much larger at all time periods; bonds5 disproportionately invested by foreign concerns. Second, the changing relative importance of foreign business on both the asset and liability side – growing up to the beginning of 2009, shrinking thereafter.