Principle of ownership (Time of recording) The principle of ownership stipulates that the creditor owns a claim on the debtor, and the debtor has an obligation to the creditor. Transactions are recorded when economic value is created,  BIS Review 79/2006  1  transformed, exchanged, transferred, or extinguished. For example, loan drawings are entered in the accounts when actual disbursements are made, and financial claims are established, and not necessarily when an agreement is signed. Accrued interest liability In order to maintain inter-temporal and inter-country comparability of external debt statistics, and to identify the variation introduced by the timing of recording of interest costs that have accrued and are not yet payable, such accrued costs must be included in the gross external debt position. With respect to bonds, the difference between the issue price and face value or redemption value is treated as accrued interest over the life of the bond. Arrears When principal or interest payments are not made when due, arrears are created, but are recorded under other debt liabilities. But the debt statistics compiler should ensure that the debt is not counted twice by understanding and applying the principle of recording arrears. Otherwise the magnitude of the debt burden would be over stated. Valuation The principle of valuation states that the nominal value of a debt instrument reflects the value of the debt at creation; any subsequent economic flows, such as transactions (e.g. repayment of principal); valuation changes including exchange rate and other valuation changes other than market price changes.

It is essential for the financial sector to manage climate-related risks, while at the same time, support the economic transition. This means financial institutions have to internalize climate considerations into their business operations and risk management framework and offer financial products and services to help business transition especially in the high-emission and vulnerable sectors without disrupting the economy and leaving someone behind. However, there is no denying that financial sector has substantial gaps and challenges to overcome in order to achieve such goals, particularly on the risk management perspective. Financial sector resilience would be undermined by the climate-related risks without appropriate measures in a timely manner. Thus, central banks and financial regulators have a crucial role in building capacity and facilitating guidelines and tools needed for climate-related and environmental risks. The first step should be providing concrete expectation and guidance for financial industry to uplift their business operations, risk management, and disclosure that align with international standards. Simultaneously, the infrastructures and common tools for climate risk management such as climate scenario analysis, stress test, and climate-related data  1/2  BIS - Central bankers' speeches  must be put in place to create an enabling ecosystem where financial institutions and regulators could assess and monitor the risks effectively. Ladies and Gentlemen, Looking ahead, it is thus inevitable that our regulatory and supervisory frameworks should take into account sustainability and climate-related factors. The conduct of prudential framework in this new landscape will arguably be the most difficult task as it is relatively new and still evolving.