The Green Finance Action Plan comprises four strategies:  strengthen the financial sector’s resilience to environmental risks; develop green financial solutions and markets for a sustainable economy; build knowledge and capabilities in sustainable finance; and harness technology to enable trusted and efficient sustainable finance flows. Let me briefly outline the progress we have made under the first three strategies and spend a bit more time on the last – on harnessing technology. First, strengthening the financial sector’s resilience to environmental risks. Later today, MAS will issue finalised guidelines for financial institutions to manage their environmental risks. The Guidelines are among the first of its kind in the Asia-Pacific to apply to all financial institutions, across banking, insurance, and asset management. The Guidelines are comprehensive, covering environmental risks besides climate change – such as pollution, loss of biodiversity, and changes in land use. MAS will assess environmental risk in our supervision of financial institutions and conduct by end-2022 industry-wide stress tests on the impact of climate risks. Second, encouraging the development of green financial products and solutions. MAS is: 8 / 10  BIS central bankers' speeches  providing grants to offset the certification costs of issuing green and sustainability-linked bonds and loans; promoting insurance solutions for climate risks; attracting green funds and asset managers with a sustainability focus; and anchoring providers of sustainability rating and verification services. Third, building knowledge and capabilities in sustainable finance.
Within the Bank of England, we are building a suite of models that allow the transmission channels for potential financial system stress to be mapped out accurately and comprehensively, including in the form of loss distributions. The outputs can also be compared to measures of financial system buffers, such as profits, to provide summary statistics of systemic vulnerability. 4 Others too have been pursuing a similar course. For example, the Austrian central bank has developed a Systemic Risk Monitor to characterise the interaction between shocks and the structure of the banking system and inform the internal policy debate. 5 11 A schematic for the planned suite of models is set out in Chart D and will be described more fully in future papers. The left-hand side of the diagram emphasises the transmission of shocks to the system through conventional channels of credit and market risk. On the righthand side, asset-pricing models can be used to facilitate inferences about banks’ balance sheet positions and vulnerability to default from market price data (such as equity prices). Given the limitations of balance sheet data and the difficulty of identifying new types of  4  A new approach to assessing risks to financial stability by Andrew Haldane, Simon Hall and Silvia Pezzini, Bank of England Financial Stability Paper No 2 April 2007 for a fuller discussion. 5  Oesterreichische Nationalbank (2006), "Systemic Risk Monitor: A Model for Systemic Risk Analysis and Stress Testing of Banking Systems", Financial Stability Report 11, by Michael Boss, Gerald Krenn, Claus Puhr, Martin Summer.