eddie yue : managing climate risks in hong kong opening remarks by mr eddie yue, chief executive of the hong kong monetary authority, at the signing ceremony of the hkma - ifc alliance for green commercial banks, hong kong, 9 november 2020. * * * vivek [ pathak, director, east asia & the pacific, international finance corporation ], ladies and gentlemen, 1. good morning. it gives me great pleasure to join you today and witness the signing of the cooperation agreement between the hong kong monetary authority and the international finance corporation to establish the alliance for green commercial banks. 2. the hkma has long cherished our close partnership with the ifc, especially since the setting up of its east asia and pacific regional office in hong kong in 2000. today we are taking that partnership to a higher level, for a broader common purpose. we feel privileged to be invited by the ifc to serve as the founding member and first regional anchor to co - launch an alliance that aims to promote green banking in the global financial market, starting with asia with a view to expanding to other regions. it is a strong recognition of hong kong ’ s status as the premiere financial centre in asia and our strong commitment to green finance. 3. climate risk is one of the biggest threats to our planet and future generations. a lot has been said about the need and urgency for the financial sector to play its part in tackling this risk. the question of “ whether ” is behind us. we need to walk the talk and address the question of “ how ”. 4. let me begin with the concrete actions we at the hkma are taking. our action plan is guided by the green and sustainable banking initiative unveiled in may 2019. we have been making significant progress since then. 5. as one of the largest reserves managers globally, we embrace responsible investing. esg principles are now an integral part of our investment criteria, processes, and asset allocation. 6. as a banking regulator, we are working together with banks to manage climate risk. being a good corporate citizen is important, but for banks there is the added dimension of managing the climate - related physical risk and transition risk associated with the projects and businesses they are funding. we have already developed a common assessment framework to help banks to assess their individual “ greenness baseline ”. in june this year, we issued a white paper that sets out our initial thoughts on the supervisory approach to addressing climate - related and sustainability issues. this will pave

that when household debt goes beyond 85 % of gdp, it becomes a drag on growth. the same threshold applies to government debt, while the figure for corporate debt is slightly higher at 90 %. according to these estimates, in the euro area we are already in the danger zone – at least with regard to public debt standing at 91 % and corporate debt at 105 %. household debt currently stands at 62 %. some caveats are in order here, though. correlation does not necessarily equal causation. does debt slow growth, or does a slowdown in growth cause n kiyotaki and j moore ( 1997 ). “ credit cycles. ” journal of political economy 105 ( 2 ), 211 – 248. b bernanke, m gertler and s gilchrist ( 1996 ). “ the financial accelerator and the flight to quality ”, review of economics and statistics 78 ( 1 ) : 1 – 15. r levine ( 2005 ) : “ finance and growth : theory and evidence ”, in p aghion and s n durlauf ( eds ), handbook of economic growth vol. 1 part a, chapter 12, pp 865 – 934. s g cecchetti, m mohanty and f zampolli ( 2011 ). “ the real effects of debt. ” bis working papers no 352. bis central bankers ’ speeches the debt - gdp ratio to rise? the policy implications would be different, depending on what really drives what. and identifying turning points in econometric models is a notoriously tricky business. the thresholds presented by the bis researchers should probably not be taken as precise estimates of when growth falls of a cliff, but rather as one more piece of a growing body of evidence that too much debt can be as harmful to growth as too little. this growth slowdown can either take the form of a gradual tectonic shift, as high levels of debt weigh on new investment. or it can take the form of an explosive eruption, as we have witnessed during the global financial crisis. and while both forms raise serious questions for policymakers, it is mainly the latter that today ’ s conference will address, since financial stability is part of the central banks ’ remit. for the reasons i have just outlined, it would probably be a futile undertaking to try to pinpoint exactly when debt starts subtracting from rather than adding to economic welfare. in the end, the amount and the form of financial intermediation has