Just as we have had to adapt to these changes, to fulfil our mission going forwards we need to look ahead to the structural shifts we face over the coming years and decades. That will mean hearing central bankers like me speak about things that we have not in the past – terms like central bank digital currencies, cyber risk, and climate change are now firmly part of our lexicon. This is not about us adding new things to our mission, nor is it about doing that which is rightly for others. It is about taking these new things into account alongside the old as we go about fulfilling our mission, delivering monetary and financial stability through time. Climate change Climate change is an obvious, and indeed urgent, example of this. The physical effects of climate change, such as rising sea levels and more frequent severe weather events, as well as the transition to a net-zero economy, through changes in government climate policy, technology and consumer preferences, create financial risks and economic consequences. The question is not if but where, to what extent, and how should we respond. Answering all three of those questions has been at the heart of our work on climate change over the past 6 years. Ignoring them is not an answer. Indeed the longer we wait, the greater the costs of adjustment.
To take one example of the complexities involved in making such an assessment, the natural rate of interest might face both downward pressure from expectations of severe weather events10 and upwards pressure from demand for investment to replace carbon-intensive capital stock (such as replacing petrol cars with electric ones). This dynamic is not unique to climate change. We see it in other structural shifts such as the post financial crisis trend of weak productivity, and the growth in intangible capital.11 To improve our understanding and better inform future monetary policy, we need more research on this topic. I am pleased to say that the Bank plans to do more in this space, both in its own capacity and through working with other central banks and international bodies. 3/5  BIS central bankers' speeches  As well as being relevant to the setting of monetary policy, climate change and the transition to net-zero are also relevant for the implementation of it. The Bank recently became the first central bank to set out a comprehensive framework for greening a monetary policy asset portfolio – the £ stock of sterling corporate bonds acquired via our Corporate Bond Purchase Scheme (CBPS).12 This will remain a monetary policy tool, with its overall target stock of assets set by the MPC in order to achieve its primary inflation objective.