But just as a town ravaged by flooding will seek to rebuild in ways that help it withstand the next big storm, so, too, must we think about how to shore up the Treasury market so it can better endure the next big shock. Today, I’m going to touch on the notable market disruptions that have taken place over the past decade. Then, I’ll discuss the imperative of a resilient Treasury market. I’ll close by challenging all of us to come together to prepare for the future. As always, before I continue, I must give the standard Fed disclaimer that the views I express here today are mine alone and do not necessarily reflect those of the Federal Open Market Committee or others in the Federal Reserve System. Look Back to Prepare for the Future A well-functioning U.S. Treasury market is critically important for our economy and, in fact, the entire world. It enables the safe and stable flow of capital and credit to households, businesses, and governments. It serves as a primary benchmark for pricing in other financial markets, both domestic and global. Last, but definitely not least, it’s vitally important for the effective transmission of monetary policy to the broader financial system and to the economy. Thankfully, most days—most years—the Treasury and related markets function incredibly well. But in the past decade, these markets have experienced three abrupt and notable disruptions, each of increasing severity.

On climate, remember, past is not prologue. In the depressing spirit of Bayesian updating that the current climate change trajectory demands, when considering scenarios for 2019, that we include weather-related events that are more severe and clustered. To help firms improve their own testing, the Bank has been encouraging knowledge sharing on the 9  types of scenario analysis envisaged under the TCFD. This will allow firms to explore how 2°C and other transition scenarios might impact their strategy and financials. More broadly, and like the other financial authorities represented here today, we recognise the value in sharing expertise and best practice to increase the rate at which firms, and indeed ourselves as regulators, move to embed more thoroughly climate-related financial risks into our risk assessment and mitigation. 8  https://www.bankofengland.co.uk/prudential-regulation/letter/2017/general-insurance-stress-test-2017-feedback This included co-hosting a conference with TCFD in late 2017. For further details see: https://www.fsb-tcfd.org/event/tcfd-boeconference-climate-scenarios-financial-risk-strategic-planning/ 9  8  All speeches are available online at www.bankofengland.co.uk/speeches  8  Conclusion Given this heavy agenda, it is encouraging that central banks and supervisors – from eight countries that together account for over a third of both global financial assets and carbon emissions – have come together to found the Network for Greening the Financial System (NGFS) to take forward coordination. There are, however, limits to our roles. Financial policymakers will not drive the transition to a lowcarbon economy. Our efforts cannot substitute for those of governments who have direct responsibilities to deliver the policies to achieve their Paris commitments.