. the ngfs has just released a guide for integrating these risks into prudential supervision. we hope that — via the leverage that membership has — it will have an effect on banks and insurance undertakings all around the world. in light of the need of a green recovery, prudential risks of climate change also need to be integrated in financial legislation at an accelerated pace. in europe, the eba is currently exploring the possibility of including sustainability risks in capital requirements for banks. this requires quantitative insight into these risks. the analysis of these risks and subsequent decision - making must be given greater priority, not only at a eu - level but also worldwide. climate related risks need to be well embedded into financial legislation, guidelines and accounting standards. role of central banks central banks can play a supporting role in the green recovery. it is up to the governments to take the first step and exploit the opportunities for green recovery through their climate policies, but as an independent organization with a long - term horizon, central banks are well - positioned to bring parties together and provide economic advice. fout! onbekende naam voor documenteigenschap. central banks are also facing the challenge of incorporating esg risks into the risk management of their own portfolios. dnb was the first central bank in the world to sign the principles for responsible investing ( pri ) in 2019. this requires us to better manage the esg risks involved in our investment activities. our charter on responsible investments specifies which actions we are currently undertaking in this respect. however, the pri does not apply to the monetary portfolios, which are much more substantial than our own investments. in the implementation of monetary policy, climate related financial risks should also be adequately mitigated. now that central banks ’ role in financial markets and the funding of banks has increased as a result of the policy response to the pandemic, this has become ever more important. central banks must evaluate whether current risks management measures need to be revised and whether additional measures are needed. for example, the ecb could include carbon emission disclosure as a requirement in its asset purchase programmes, to promote transparency and enable adequate risk identification and pricing. still, the actual contribution of monetary policy to sustainability depends on the climate policy pursued by governments. effective climate policies will lead to a greater flow of capital towards sustainable economic activities, thereby " greening " monetary operations automatically. increased demand for green investments can lead to higher supply of green bonds or bonds from sustainable companies

nout wellink : towards an international dispute resolution facility for the financial markets speech by mr nout wellink, president of the netherlands bank and chairman of the basel committee on banking supervision, at the expert round table, world legal forum, den haag, 25 october 2010. * * * ladies and gentlemen, it is a great pleasure to address you in this magnificent venue. the peace palace is a symbol of peace that – at the time of its opening in 1913 – was acclaimed to be a “ dream palace as big and mighty as the idea of world peace itself ”. the ambitions of world peace were embodied by contributions of numerous nations in the form of works of art, furniture and building material that today still decorate this building. this is a striking entourage to discuss new initiatives aimed at maintaining another global ambition, the ambition of financial stability. financial innovation, advantages over the past decades we have witnessed a huge growth in complex and innovative financial products, including in the over - the - counter ( otc ) derivatives markets. according to the latest bis estimates, the notional value of outstanding otc contracts exceeded the staggering amount of 615 trillion usd by the end of 2009 1. i believe that financial innovation has brought us real benefits. financial products like credit derivatives have increased the possibilities to spread and manage risks. and indeed, the financial system proved to be better capable of absorbing shocks, as was demonstrated when the dot. com bubble burst or after 9 / 11. however, clearly, financial innovation has not prevented the financial crisis from happening. in fact, financial innovation is often pointed out as one of the root causes. risks associated with financial innovation the risks associated with financial innovation are real. first of all, not only size, but also complexity in the markets for sophisticated financial products increased rapidly. this came at the cost of transparency. at the outset of the financial crisis, hardly anyone seemed to know what the true risks and value of complex financial products were and who would in the end bear the losses. in many cases, this was even true for the parties who created them in the first place. risk management systems of financial institutions could hardly keep up with product innovation. furthermore, the increased interconnectedness of financial markets made that not only gains, but also losses were transmitted through the system easily, hardly hampered by time or national borders. although the system was less vulnerable to shocks, it turned out that it was at the same time prone to large accidents and sudden loss of confidence. by implication