This increase in costs may, in turn, drive up the prices of those goods whose production requires more energy and, subsequently, a decrease in the demand for them, affecting firms’ revenues. Household real income would also be affected. New greener technologies may reduce these energy costs due to their greater efficiency, but they may also increase firms’ leverage, on account of the need to invest in these new production processes. In the case of households, investment and adaptation will be needed in personal transport and housing. Also, the transition could generate a change in consumer preferences, in favour of greener goods and services. This would involve changes in relative prices that would affect firms and sectors unevenly. As regards the impact of the physical risks, damage to physical capital, including housing, and production disruption as a result of the materialisation of these risks would affect institutions’ revenues and costs, and also the value of collateral and wealth. For one thing, insurance and maintenance costs will rise, causing an overall increase in companies’ costs. Furthermore, physical capital damage would necessitate new investment, which would increase leverage. Additionally, revenues would also suffer from these risks due to their  5  Climate Change impacts and adaptation in Europe, Joint Research Centre, European Commission, May 2020. 6  Climate-related risk drivers and their transmission channels, BCBS, April 2021. 2  negative effects on production capacity.
Eva Srejber: New economy - or blend of new and old? Speech by Eva Srejber, Second Deputy Governor of the Sveriges Riksbank, at a meeting arranged by WM-Data ub Tylösand on 23 October 2000. *  *  *  Major technological changes have occurred before. Then as now, many people talked about a new age that would involve better communications, new economic relations and a very promising future. It is therefore important to keep a level head amidst the technological enthusiasm over future opportunities. The fact that I am today emphasising the risks more than the advantages, is not because I consider the risks to be more important than the advantages, but because the risks appear to have been largely forgotten in the general debate on the economy. Let us make a sober analysis of what is happening, and maybe we can avoid repeating the mistakes made during previous technological leaps. Moreover, I will touch on the uncertainty and lack of information regarding the structural changes currently taking place in the economy. In conclusion, I will also indicate to what extent these phenomena have already affected and can be expected to affect monetary policy. It has happened before A nation’s economy is constantly subject to changes that lead to reappraisals or to the development of old economic relations and theories. This is nothing new.