co2 emissions must be priced in such a way as to enforce a paris compatible transition to a net - zero economy. five years ago, governments from nearly 200 countries made a promise. to keep the earth safe and inhabitable for future generations. today, we must face the fact that we are running behind schedule to deliver on that promise. the tragedy is that the tragedy is no longer at the horizon. the tragedy is now. the famine, the floods, the fires and the refugees are now. covid - 19, however dreadful in itself, provides us with a unique opportunity to regain the lost ground in the battle against climate change and biodiversity loss. governments worldwide are investing trillions of euro to help our economies recover from the covid - 19 crisis. let those trillions be green trillions. the task before us is big and complex. but we have the money, we have the technology, it is clear what we have to do. the only thing we further need is the will and determination to do it now. nous avons perdu une bataille, mais nous n ’ avons pas perdu la guerre! il faut la gagner!

of their risk measurement and management of the complex financial instruments that are typically used in this model. basel ii also establishes benchmarks for recognising risk transfer and mitigation in securitisation and credit derivatives structures. it sets a boundary between the point at which a firm transfers risk and actually retains the risk. these enable supervisors to assess the degree of risk transfer and mitigation under both normal and stressed market conditions. and finally, basel ii requires that firms strengthen their frameworks for assessing appropriate capital for the trading book. this has taken on increasing importance given the rapid growth of trading book assets relative to the banking book. for example – the basel committee – in consultation with the industry – continues to work on developing a framework for better capturing the default risk associated with credit exposures in the trading book. in addition, basel ii permits firms to use their own models to measure counterparty credit risk exposures. this risk arises, for example, in otc derivatives, which are becoming increasingly complex and more difficult to measure. this approach is closely aligned with industry best practice as well as the underlying economic risks of these activities. basel ii has also paved the way for improvements in other, less visible ways. one example is basel ii ’ s greater focus on firms ’ risk management infrastructure. for instance, the framework requires fundamental improvement in the data supporting pd, lgd, and ead estimates that underpin economic and regulatory capital assessments over an economic cycle. this has spurred improvements in areas such as data collection and management information systems. these advances, along with the incentives to improve risk management practices, will support further innovation and improvement in risk management and economic capital modelling. pillar 2 let me now turn to the second pillar – the supervisory review process. pillar 2 really starts with you, the banks. first and foremost, responsibility lies with bank management for developing an internal capital assessment process and setting capital targets that are commensurate with the bank ’ s risk profile and control environment. a sound risk management process is the basis for an effective assessment of the adequacy of a bank ’ s capital. and bank management bears the primary responsibility for ensuring that the bank maintains adequate capital to support the risks beyond the minimum requirements. excessive participation by supervisors in a bank's capital adequacy assessment process or firms'over - reliance on supervisory review of their assessments are both counter to basel ii ’ s objectives and raise the risk of moral hazard. the better banks measure and manage