As always, what I will say here today represents my own views and not necessarily those of the Federal Open Market Committee (FOMC, Committee) or the Federal Reserve System. 1  Krishna Guha, Paolo Pesenti, Simon Potter, Jamie McAndrews, Jonathan McCarthy, Lorie Logan, John Clark, Eben Lazarus and others on my staff helped with the preparation of these remarks. BIS central bankers’ speeches  1  Review of the experience in Japan and the United States Let me start by briefly reviewing the experience of Japan and the United States. As you all know, Japan’s rapid economic ascent and investment boom came to an abrupt halt in the early 1990s with the bursting of a gigantic bubble in equities and real estate. Asset price deflation resulted in a huge decline in wealth. This led to a sharp fall in demand, a balance sheet squeeze for both businesses and households, and a large increase in problem loans for Japanese financial intermediaries. By some measures – such as the loss of wealth relative to the size of the economy – this was a bigger shock than the U.S. experienced in 2008. Growth slowed sharply and inflation fell.
We intend to collaborate closely, sharing perspectives on policy issues and technical designs. And we look forward to leveraging advancements arising from Benoît’s new role leading the BIS Innovation Hub. 7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7  Innovation is best achieved by empowering competition. For the Bank, this means levelling the playing field between old and new by allowing new entrants access to the same resources as incumbents, while holding similar risks to similar standards. It also means updating our public infrastructure to enable state-of-the-art private sector solutions to emerge which will lower costs, increase speed and improve customer experience of domestic and international payments. Any new payments system must be efficient, resilient and secure. A safe payment system is only useful if people use it, which means it must deliver fast, user-friendly and inclusive services. This in turn requires that payment systems are open to innovation and competition, and are built around the comparative advantages of central banks and the private sector. Addressing the Climate Crisis My final challenge facing central banks is the most fundamental. Indeed, it is existential. Four years since the Paris Agreement, a more sustainable financial system is being built. It’s funding private sector innovation, it has the potential to amplify the effectiveness of government climate policies, and it could accelerate the transition to a net zero economy. But we must go much further if the world is to reach net zero carbon emissions. Disclosure must become comprehensive. Risk management must be transformed.