The NGFS was founded five years ago on the recognition that climate-related risk is a threat to the financial system and that the financial sector can play a role in enabling the transition to a low-carbon economy. We number 140 members and observers now, comprising central banks, financial supervisors, and international financial institutions from across the world. Nature-related risks have material macroeconomic, macroprudential, and microprudential consequences. Central banks and supervisors therefore cannot afford to ignore nature and biodiversity loss. The NGFS has produced three research papers on biodiversity and financial stability, together with the International Network for Sustainable Financial Policy Insights, Research, and Exchange, or INSPIRE. The research shows that nature-related shocks can transmit to the financial system. Corporate dependencies on natural capital pose market and credit risks to individual financial institutions' portfolios, which can potentially aggregate into systemic financial exposures. The NGFS has thus created aTaskforce for Biodiversity Loss and Nature-related Risks, to help mainstream nature-related financial risks across our work on supervision, financial stability oversight, and monetary policy. The Taskforce will develop a comprehensive framework to identify the transmission channels from nature-related risks to central banking and supervisory activities. For its part, the Monetary Authority of Singapore has published environmental risk management guidelines for banks, asset managers, and insurers operating in Singapore. The Guidelines set out the expectation that financial institutions should manage environmental risks such as those arising from biodiversity loss. Finance can be a powerful force for helping to bend the curve of nature degradation.

In relation to international capital flows in particular, the answer is not at all to encourage countries to cut themselves off from international finance through the maintenance or imposition of capital controls - though that is not totally excluded. On the contrary the very positive contribution that private capital has made in recent years to the development of many of the emerging market countries is clearly acknowledged, and the objective of orderly and properly sequenced dismantlement of remaining capital controls is generally maintained. The purpose is rather to help to ensure, through greater transparency and improvements to the financial infrastructure, that capital flows to where it can be most productively invested. That should, in turn, help to reduce capital account volatility. At the same time much more attention is being paid to the importance of the maturity and currency composition of national balance sheets, including particularly the maturity and currency composition of the assets and explicit or implied liabilities of the public sector, and also of the banking sector, which can be relatively easily monitored through the supervisory process. I recognise that this emphasis on balance sheet management - which is especially important where a country is seeking actively to manage its exchange rate - may raise the cost of short-term capital inflows; but that seems to me to be a price worth paying for greater protection against sudden capital outflows if confidence declines.