Evidently, we must shorten the transition as far as possible, so that banks are aware with sufficient certainty of the supervisor’s requirements in the short and medium term and can, in this way, effectively design their strategic and management measures. True, this objective is currently hampered by the still-unstable international regulatory framework. I trust the Basel Committee’s announced intention in its recent report to the G20 to see through the regulatory reform next year will be fulfilled. In any event, in the supervisory realm we must make further efforts to specify with greater precision and permanence the solvency requirements for each bank based on its risk profile, and to establish certain clear guidelines on the application of restrictions on the remuneration of capital instruments and on directors’ variable remuneration. At the same time, as I previously pointed out, we must continue to work on the convergence of supervisory practices, moving towards better standards, and on smoothing the differences that still persist across the different SSM jurisdictions. For example, while some national authorities have traditionally focused on reviewing management procedures, others have placed particular emphasis on reviewing the classification and valuation of assets on financial statements. These differences in supervisory practices involve, in turn, heterogeneity in the professional profile of the employees of the various authorities now sharing missions within the SSM.
There will be winners and losers internationally but also within countries. This calls for a deeper international cooperation which will promote a globally fair transition to a low-carbon economy. And each and every one of us – civil society; States and regional regulators; academics, NGO’s and think-tanks; corporates and financial institutions; central banks, supervisors and standard setters – has a part to play: it is a shared challenge that no one can tackle alone. We should also focus our efforts and attention on emerging countries and developing economies. They are usually hit harder by climate risks and on top of that also face environmental risks at large, (such as air pollution, water pollution and scarcity of fresh water, land contamination, harming biodiversity and deforestation). In 2017 alone, almost 5 million people worldwide died due to air pollution. Even if environmental degradation and associated (financial) risks are often more local in their reach, there are nevertheless compelling reasons for the NGFS to look at environmental risks relevant to the financial system and differentiate more in the recommendations provided between the types of financial systems. Conclusion: The success of the Paris Agreement will depend on our ability to move forward in an inclusive manner. The world is in the hands of all of us. But certainly some have a greater influence on its fate than others. Central banks and supervisors, within the NGFS and alongside men and women of good will, are playing their part in mitigating the disruption caused by climate change.