dnb - omfif conference on biodiversity – amsterdam, 29 september 2022 biodiversity, macroeconomics and finance : what we do know, what we don ’ t know yet, and what we have to do speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ), deborah guedj ( deborah. guedj @ banquefrance. fr ) page 1 sur 13 ladies and gentlemen, it is a great pleasure to be with you again today at this dnb - omfif conference on biodiversity. let me start by sharing a memory : more than four years ago, i was here in amsterdam for the very first conference of the nascent ngfs – and i must pay tribute to its first chair frank elderson to whom we collectively owe a great deal for his passionate leadership on climate but also nature - related issues. at the time i called for green finance to be the “ new frontier for the 21st century ”. the substantial progress made since then on climate change – disclosure, stress tests, greening of the monetary policy – is undoubtedly a source of optimism ; but it also gives rise to two concerns : ( i ) despite this progress, the fight against climate change is far from over ( ii ) on biodiversity, which we are discussing today, our knowledge and tools lag several years behind those on the climate. today, i would like to share with you clearly and purposefully what we already know ( a ), and what we don ’ t know yet ( b ), before reflecting on what we have to do ( c ). a. what we do know 1. we are facing an alarming loss of biodiversity we can no longer ignore the warnings of a “ silent spring ”. i we are currently facing a global change in fauna and flora : some are rarefying or disappearing, while others are now thriving in environments that were until recently not suited for them. the figures are quite telling : 25 % of studied species are threatened with extinction ; scientist are talking about an ongoing 6th mass extinction, the first one caused by humankind. yet, biodiversity is key to the resilience of ecosystems, which provide unaccounted for but essential services that sustain life on our planet, what we call “ ecosystem services ”. to put it in economic terms, they include the provision of basic but essential goods such as food, wood, water

##inancing operations or by setting up a discount window that ensures that banks with unexpected temporary requirements can refinance themselves. while markets listen to central banks, central banks also listen to markets since the price formation in markets reflects agents ’ expectations, in particular concerning inflation, and their assessment of risks ; central banks require such information to make their analyses and take their monetary policy decisions. the smooth functioning of markets and financial stability are therefore essential for the effective transmission of monetary policy. if the shape of the yield curve is evolving regardless of monetary policy decisions, if risk premia are uncorrelated with fundamentals, if market liquidity dries up, then the interest rate channel ceases to function. when this affects banks ’ funding, in particular via a freezing of the interbank market, the bank lending channel seizes up. in such circumstances, central banks must turn to non - standard measures such as direct aggressive interventions to ensure that their monetary policy decisions are effectively transmitted and that markets keep ticking over. needless to say, the recent period has seen many such incidents as well as the implementation of many non - standard measures. among the measures currently in place, some are based on “ quantitative easing ”, which involves the purchasing of securities primarily with a view to generating excess liquidity that in turn moves into all market segments and fosters a better refinancing of the economy ; others are based on “ credit easing ” and aim to restore the functioning of certain particularly disrupted market segments. seen from another angle, certain policies aim to restore the smooth functioning of the interest rate channel by directly impacting the yield curve, others aim to restore the bank lending channel by ensuring that banks can obtain funding beyond the very short - term maturities to which central banks usually confine themselves. in all events, central banks stand in for failing market participants or markets. since 2008, we have seen the fed come to the rescue of the us commercial paper market and the mortgage backed securities market ; we have seen the bank of england purchase in the space of a few months gbp 200 billion in government securities, representing around 15 % of the united kingdom ’ s gdp ; the eurosystem, for its part, has conducted massive oneyear refinancing operations with euro area banks and has kick started the covered bond market, via its eur 60 billion purchase programme. next may, it also start intervening in the government securities market. this calls for further clarification in the light of my earlier