If, for as long as it lasts, financing the deficit 5  The word “relatively” is important here – what matters is the behaviour of domestic demand compared with that in other countries. If demand weakens in other countries the home country’s exchange rate will still appreciate even if nothing happens to domestic savings rates. [More here on global imbalances] 6 For a thorough treatment of the relationship between imbalances and the exchange rate – and specifically the chain of causation running from the former to the latter – see Obstfeld and Rogoff (2000), Obstfeld and Rogoff (2007). 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  relies on “the kindness of strangers” (as the Governor once described it) perhaps the foreign exchange market thinks those strangers will be less generous to a UK outside the EU. International capital markets might require a higher premium for sterling finance. If so, this would slow the growth of domestic demand 7  that much earlier, accelerate a rebalancing of the economy and depress the fair value of the exchange rate . While possible in principle, I’m not convinced this is the main explanation for sterling’s reaction to the referendum result. The currency has remained weak even in the face of robust consumption growth since that date.
The bond proceeds are channelled to support healthcare and pharmaceutical development, for the benefit of lower income households and small businesses. The World Bank’s pandemic bond facility has been triggered, and will provide $ million in emergency financing to 64 of the world’s poorest countries to support their recovery.3 5. Today, I will focus on opportunities in green and sustainable finance, and impact investing. Pushing forward with green finance for a sustainable world 6. The pandemic provides a prime opportunity for countries to “build back better”. It is important now, more than ever, that countries not only rebuild their economies and preserve jobs, but also in the process, intentionally build a more sustainable new economy. There have been growing calls for governments to prioritise or accelerate green infrastructure development as part of recovery plans. Infrastructure development is critical to driving economic growth and improving social outcomes, while climate change remains a significant threat to mankind. It is important that a right balance between growth and sustainability be achieved. Public-private partnerships will be key to achieving this. Last week, Infrastructure Asia in Singapore partnered the World Bank Group and Singapore Management University to build capabilities of regional government officials, and raise awarenss of solutions to support sustainable and resilient infrastructure development, such as clean energy projects.4 1/4  BIS central bankers' speeches  7. Singapore is committed to support the pivot towards a clean and sustainable future.