Detailed and standardised reference scenarios are needed for this kind of assessment, such as those being developed by the Network of Central Banks and Supervisors for Greening the Financial system.27  26 27  https://www.bankofengland.co.uk/-/media/boe/files/annual-report/2020/climate-related-financial-disclosure-report-2019-20.pdf https://www.ngfs.net/sites/default/files/medias/documents/820184_ngfs_scenarios_final_version_v6.pdf 11  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  11  Chart 5: Estimate of APF corporate  Chart 6: Alternative warming potential metrics for same  holdings ‘portfolio warming potential’  portfolio  Source: see footnote 26. Source: see footnote 26. Building block 2: capital instruments The second key building block for an effective capital markets infrastructure for trading climate risk is a set of viable capital instruments. As I mentioned earlier, it is not clear a separate climate asset class is needed in steady state: dedicated ‘IT investment bonds’ or ‘physical buildings equity’ are for example pretty rare! But climate-linked instruments can be very helpful on the transition path, to give focus to the need for change, help meet specific investor needs, and provide a credible ‘put your money where your mouth is’ commitment from issuers to deliver on specific projects until more robust and consistent decision useful metrics can be developed. A wide variety of new climate-linked markets have begun or are under discussion, including for example Voluntary Carbon Offsets,28 derivatives products to manage risks in renewable energy29 or green mortgage-backed securities.30 But I want to focus my remarks today on the most prominent example: that of climate-linked, or ‘green’ bonds.

Bank lending to households and firms is growing at almost 6% per year. This is good news, but we must avoid excesses. There are thus several efforts to be made in 2018 to ensure the smooth financing of our economy:  Remain vigilant to ensure financial stability, first and foremost. At last December's meeting of the Haut Conseil de Stabilité Financière (HCSF – High Council for Financial Stability), we decided to take a macroprudential measure to limit the sharp rise in the debt of certain large companies, including bond debt. It will apply as of 1 July after approval by the European authorities. If credit cycle risks persist – i.e. growth that is significantly higher than that justified by economic fundamentals – we stand ready to act further at any time in 2018, including if necessary by implementing a countercyclical capital buffer. Promoting the attractiveness of the Paris financial centre in the context of Brexit, second: irrespective of the possible transition, the City will most likely lose its EU passporting rights. The Paris financial centre must continue to develop, notably in the area of the clearing of financial instruments, and promote its numerous qualities, enhanced by the arrival of the EBA, in order to become the main euro area centre for market activities. This is our collective challenge, over and above announcements of welcoming registered head offices. Lastly, better channelling our savings. Overall, the French economy has no lack of financing, thanks also to the soundness of its financial institutions.