, with temperatures of up to 40 degrees celsius. the heat adds to a long - running drought, further exacerbating water shortages in parts of the country. 1 climate change is hitting home. it is not only destroying livelihoods, it can also hurt output and influence inflation. think of the horrendous flooding in pakistan, which pushed food prices sky - high. to give you some numbers : global losses from natural disasters totalled 270 billion us dollar last year, according to munich re's natcat service. roughly 55 % was not insured. 2 in a nutshell, climate change affects the real economy and thus central banks'mandate. central bankers and supervisors globally must continue to improve their economic models to better capture climate risks. 3 nature - related risks and biodiversity loss 3. 1 widening the focus i would even go a step further and argue that central banks and supervisors also need to consider nature - related risks and biodiversity loss. it is time to widen the focus for a simple yet important reason : because there will be no stable climate without a healthy natural world – and vice versa. in other words, climate change and biodiversity loss are interconnected and mutually reinforcing. still, nature and biodiversity are disappearing rapidly. and human activity is driving it. deforestation for example and the degradation of fertile land is not only putting wildlife at risk, it also destroys communities, output and hence welfare. according to the world economic forum more than 50 % of global economic output depends on nature. 3 if selected ecosystem services were to collapse, it would cause a decline in global gross domestic product of more than 2 % annually by 2030, according to world bank estimates. 4 3. 2 ngfs work global central banks and supervisors have been taking note. the network for greening the financial system ( ngfs ) – of which i am the vice chair – has set up a task force on biodiversity loss and nature - related risks. while the task force's final recommendations are still outstanding, evidence is already pointing in one direction : if financial institutions continue to ignore nature - related risks – as the majority are doing right now – then this could hurt banks'risk profile and hence their profitability. 2 / 4 bis - central bankers'speeches ignoring nature risks could, for example, lead to losses on corporate loan books and asset holdings. there is an urgent need for further research on the transmission channels from nature loss to the economy and the financial system. unfortunately, the data

from standards in the market at the time, so one would not expect any large short - term effects. however, as lending increases with the recovery of the financial sector in the aftermath of the crisis, the measures will come into play and contribute to financial stability. it is too soon to assess what the impact of these measures on the economy has been, as only a small number of loans drawn down have been subject to these rules and as banks may have had some initial difficulties implementing the rules. in fact, the banks have not yet been required to report their compliance with the rules. however, we have seen some evidence that house price expectations have declined, suggesting that the speculative element of the property market has become less important, as buyers recognise that risky mortgage lending will not be allowed to fuel another devastating housing bubble. as argued by ronan lyons in this quarter ’ s daft. ie house price report. bis central bankers ’ speeches