The NGFS is examining the role of supervisors in assessing financial institutions' transition plans as well as their transition planning processes. We have done a stock-take of current supervisory frameworks on transition plans. We will share the results of the stocktake with the Basel Committee on Banking Supervision and the Financial Stability Board, to facilitate coordination in the development of transition planning standards. The next phase of work will examine the relevance of transition planning to supervisors' mandates, toolkits, and prudential frameworks. Recognising that there is a spectrum of supervisory mandates, such guidance will be flexible and based on a building block approach. Nature-related risks The world is facing a crisis of biodiversity loss, which is no less threatening than the climate crisis. The loss of biodiversity not only has serious ecological and social consequences, but also significant macroeconomic implications. Biodiversity and so-called ecosystem services underpin a significant portion of global GDP. The World Economic Forum has estimated that $ trillion of economic value generation, or more than half of global GDP, is moderately or highly dependent on nature. For example, over three-quarters of the world's food crops rely on insect and animal pollination. One can imagine the consequences for food supply if this process of pollination is disrupted. 4/5  BIS - Central bankers' speeches  Sectors like consumer goods, real estate, and transportation depend on ecosystem services such as water availability, minerals, natural fibres, and the protections that natural habitats provide. This dependence is sometimes direct but very often indirect through supply chain dependencies.

For the financial channel, it will be mainly through a spike in risk aversion and drying up of bank credit, quite similar to 2008. Already, we have seen some retraction in the Eurozone banks’ trade finance activities in Asia, but the local and global banks have stepped in to fill the void. Financial market stresses will be felt most keenly in capital flows, currency markets, and interbank funding. There could be larger and more volatile capital flows. We must be prepared for both excessive inflows as well as outflows. This could in turn have either upward pressures or downward pressures on the Singapore Dollar. Interbank funding could tighten further. We are keeping a close watch on market liquidity conditions, especially in the availability of US Dollar funding. Finally, the impact on safety and soundness of financial institutions. Financial institutions operating in Singapore have limited direct exposure to peripheral Europe. But if the crisis spreads to core Europe, the contagion could be larger. MAS is closely monitoring banks’ lending exposures and funding profiles. Given our close links to global financial networks, we will not be unaffected. But our financial system is sound and we should be able to weather the storm. Our local banks – at the core of the financial system – have strong capital and liquidity positions. They have very good asset quality, with non-performing loans ratio at just 1.3%. We have been carrying out periodic industry-wide stress tests.