improve their operational resilience by strengthening their ability to respond to and recover from cyber - attacks. at a minimum, mitigating cyber threats would require effective collaboration between regulators and the industry, adequate contingency and central bank of kuwait - public عام - بنك الكويت المركزي recovery plans by banks and sound security practices by all participants of financial market infrastructure. in kuwait, we are in the process of putting in place an advanced platform for effective information sharing about cyber threats that can later be used at the regional level. supervisors in this regard can leverage cpmi - iosco guidance that calls for ‘ resilience by design ’, encouraging to incorporate sound security features in the system right from its earliest stage of conceptualization. this approach will help address the potential cyber compromises that could stem from banks ’ dependence on legacy technologies. to help strengthen cyber resilience of financial institutions, financial stability board ( fsb ) is currently working on ‘ identifying practices to help financial institutions recover from and respond to cyber incidents ’. next year, they are planning to release a toolkit of effective practices that banking industry can use in improving operational resilience against cyber threats. coping with climate change the second emerging issue warranting our close attention is climate change. according to un estimates, around 60 million people were affected by extreme weather events in 2018 alone. and within this year, we have witnessed the damaging impact of wildfire in california, hurricane in bahamas, cyclone in bangladesh and typhoon in japan. thankfully, the issue of climate change, after languishing on margins for years, has finally caught policy makers ’ attention. as victor hugo once said, ‘ nothing is as powerful as an idea whose time has come ’. it seems that time has finally come for the climate change to receive the attention it deserves. climate risks stem both from climate shocks like floods, hurricanes and other severe weather events as well as from trends such as warming temperatures, melting glaciers and rising sea levels. broadly speaking, these weather developments pose two types of risks to the financial sector ; physical and transition. increasing severity and frequency of extreme weather events could pose serious physical risks by damaging the assets that constitute banks ’ exposures. additionally, natural disasters can damage public infrastructure and destroy livelihood, hurting economic activity in general. on the other hand, transition risk stems from the economic impact of a shift to a lowcarbon economy. factors like development of environment - friendly technologies,

index, which marked a year - on - year increase of 1. 6 percent in july, the largest since the latter part of the bubble period. higher crude oil prices are also affecting the cpi through the rise in prices of gasoline and other petroleum - related products. we should also pay attention to the effects of the increase in crude oil prices on economic activity. the steady expansion of the world economy including the united states may be adversely affected. at home, higher crude oil prices may have a negative impact on corporate profits and households ’ spending behavior. conduct of monetary policy let me turn now to the conduct of monetary policy, bearing in mind the current situation in which prices are not increasing together with the economic recovery. the bank has made a commitment to continue the current quantitative easing policy until the year - onyear change in the cpi registers zero percent or higher on a sustainable basis. such a commitment is unusual for a central bank. since the cpi is still on a declining trend, the bank is determined to pursue an easy monetary policy even as the economy continues to recover. the positive impact of the current easy monetary policy on economic activity is strengthening as the economy recovers. the bank ’ s policy commitment allows firms to continue enjoying low funding costs through the stability of expectations about future interest rates. as the economic recovery raises the expected rate of return on new investment with interest rates remaining low, firms will become more inclined to undertake investment. we expect consumer prices to continue declining slightly year on year due to the decrease in rice prices in the fall as a flipside of the increase of last year, despite higher crude oil prices. so far, we have not observed any major changes in the discrepancy between economic activity and prices, productivity, and wages. it is our judgment that we remain at the stage where we should maintain the current commitment and firmly continue the quantitative easing policy. eventually, we must return to the conventional monetary policy of using short - term interest rates as an operating target, from the current policy of using the current account balance at the bank as an operating target. the process of returning to the conventional monetary policy consists of two elements. one element is how to reduce the current account balance at the bank of japan. financial institutions have a legal obligation to hold about 6 trillion yen in the current account at the bank as required reserves. at present, given the ample provision of liquidity by the bank, they are holding 30 to 35 trillion yen in their current accounts, far exceeding the required