Moreover, as in the case of any structural change, the past may not be a useful guide to the future, so that different climate transition scenarios should be considered and their implications analysed, irrespective of the behaviour of borrowers in the past. This is precisely the main contribution of one of the macroprudential tools made available to financial sector supervisors since the international financial crisis: stress tests. The 13  Margarita Delgado, “Energy transition and financial stability. Implications for the Spanish deposit-taking institutions”, Financial Stability Review, autumn 2019, https://www.bde.es/f/webbde/GAP/Secciones/Publicaciones/InformesBoletinesRevistas/RevistaEstabilidadFinanciera/ 19/noviembre/Review_EF_Autumn2019.pdf. 5  Banco de España, like other international supervisors, is developing the necessary methodologies to perform this type of exercise for climate risks. Developing these methodologies, however, is not without difficulty. First, there are significant information gaps that need to be covered as soon as possible. On one hand, only large firms have estimated their carbon footprints and practically none of these estimate their footprint when the inputs incorporated into their productive process are included. On the other hand, there is no centralised register of energy ratings of homes, the heating and cooling of which accounts for around 25% of total emissions, these being the main collateral for credit transactions through the creation of mortgages. These examples are just some of the most notable difficulties involved in evaluating such risks. On balance, I consider that supervisors can play an important role in this area by identifying and disseminating the information necessary to assess the associated risks.

For appropriate economic policies to be designed and implemented in the climate sphere it is also essential to understand that, in the transition to a more sustainable economy, there will be individuals, sectors and even countries whose welfare will inevitably be reduced (at least during the phase of transition to a new stationary state). Our responsibility for economic policy means we must properly identify those who are most likely to become “losers” and to take measures to mitigate the net negative impact on them of the transformation into a more sustainable economy. To illustrate this, let me use an example that I have referred to on other occasions:7 the globalisation debate. From the standpoint of economic theory there is little doubt that international trade has a net positive effect on the level of activity and global welfare. However, we know that in reality this is so when we compare aggregate aspects of the economy in two different equilibria, one with little international trade and another with a high 5  https://www.bankingsupervision.europa.eu/ecb/pub/ra/html/ssm.ra2020~a9164196cc.es.html#toc3 See the latest progress report of the Task Force on Climate-related Financial Disclosures (2019), available at: https://www.fsb-tcfd.org/wp-content/uploads/2019/06/2019-TCFD-Status-Report-FINAL-053119.pdf 7 Pablo Hernández de Cos (2019), Global Imbalances and Capital Flows in the Era of New Technologies, opening remarks, Banco de España and the Reinventing Bretton Woods Committee. Available at: https://www.bde.es/f/webbde/GAP/Secciones/SalaPrensa/IntervencionesPublicas/Gobernador/Arc/Fic/h dc100919.pdf 6  Pablo Hernández de Cos (2020), “Multilateralism and globalisation reforms”, presentation of the book Excesos: amenazas a la prosperidad global, by Emilio Ontiveros. Available at: https://www.bde.es/f/webbde/GAP/Secciones/SalaPrensa/IntervencionesPublicas/Gobernador/Arc/hdc280120en.pdf  3  level.