A further mitigating factor is that household savings rates appear to have risen, involuntarily and significantly, due to social distancing policies. A Bank of England survey in conjunction with Ipsos Mori suggests the aggregate saving ratio is broadly unchanged, although with considerable heterogeneity across income cohorts (Chart 12). But it is possible these survey respondents did not capture the involuntary increase in households’ cash balances when they answered questions about their savings behaviour. 14 15  Haldane (2020). Hicks (1950). 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  For example, sterling deposits held by households and companies in banks have increased sharply over the past few months, by around £ billion (Chart 13). That is consistent with a significant rise in the saving ratio. These higher involuntary savings could be drawn down to finance future spending, at least by some households. In aggregate, they potentially dwarf any voluntary rise in savings for precautionary purposes. Chart 12: Saving rates by income (net balance) Net balance increased savings (%) 25 20 15 10 5 0 -5 -10 -15 Up to £  £  £ - £  £  Sources: Ipsos Mori and Bank calculations. Notes: Research was carried out by Ipsos MORI on behalf of The Bank of England. It surveyed a nationally representative quota sample of 2,243 adults in the United Kingdom aged 16-75 using its online i:omnibus on 29 May to 3 June.
The banks have a key role to play in this effort through financing the transition as well through providing adequate disclosures to the markets. We therefore expect them to adopt both their business models and risk  1/2  BIS - Central bankers' speeches  management frameworks to incorporate climate and environmental risks. The fact that certain banks have started making tangible steps in this regard is a positive development, but there is still some way yet to be travelled. The management of climate risk by banks is on the top of the supervisory agenda. We acknowledge the challenge that this poses especially for smaller banks. However, we do expect them to act more decisively in the said direction. By default, this will ultimately also target the banks' clientele and the submission of detailed climate related information in order to feed the banks' risk management processes. The challenges noted above, require significant up- front investment before reaping the benefits. The banks should proceed without undue delays to the transformation of their business models to address a new challenging business environment. Complacency emanating from short term profits is not a viable option. Sustainability through transformation is the way forward. Thank you. 2/2  BIS - Central bankers' speeches