international trade advantages. these factors entail large shocks on key economic sectors, can alter financial conditions, and disrupt asset prices and financial stability. these risks can have significant direct, indirect and contagion effects that need to be addressed promptly. actually, there is research currently being done at banco de mexico to understand these complex 1 / 3 bis central bankers'speeches interactions, and in particular, on the interplay between transition risks in different climate scenarios and its impact on financial institutions and financial stability. we have highly granular data that allows this research to move forward. it basically shows that the interconnectedness and common exposures of financial intermediaries are relevant and might significantly increase the size of the initial shock to asset prices. so clearly, we know the amplifying effects of some these shocks. now let me go to the second key issue. we need to create better international conditions to mobilize and accelerate investments in low carbon activities, especially in emerging markets and less developed countries for the following four reasons : 1. the starting point of the global climate finance agenda is very much focused on developed countries. the emerging economies and ldcs position in this topic and the strategies that are needed to accelerate the 3progress of the agenda in these regions are not being adequately identified. 2. given the current initial conditions, any amount invested in climate change mitigation in emerging and ldcs can have a larger impact and thus a larger positive externality than in developed countries. from this perspective a dollar invested in emerging markets and ldcs can have a higher mitigation potential, thus it makes sense to create the conditions for such investments to be made. it is unfortunate that must needed investments would not be done for cost of funding reasons. 3. also, emerging countries and ldcs have less space to spend in climate friendly projects than they had before the covid 19 pandemic. i think it is very clear that the policy space has been eroded by covid 19. 4. it is essential to move from a bad equilibrium with high financing costs and insufficient green capital mobilization to advance this agenda globally, to an equilibrium with climate friendly funding sources at scale for these countries at genuinely low financing costs. such funding alternatives would have positive global externalities and support economic activity and investment in these regions. so, i think we need to understand better and mobilize resources and actions to move forward the agenda. question 3. how would you concretely implement them? in this concrete domain i

when the federal funds rate was comparatively high. the subsequent surge in capital flows in 2009, as the crisis was abating, largely reflects a rebound from the capital flow interruption during the crisis itself, though highly accommodative monetary policies in advanced economies doubtless also played a role. moreover, capital flows to emes started to ease after 2011, a period when the federal reserve continued to add accommodation and reduce yields through increases in its balance sheet, as shown in the right panel. and, more recently, capital flows to emes have picked up again despite the fact that the fed has been removing accommodation since 2015. if u. s. monetary policy is not the major determinant, what other factors have been driving eme capital flows? one prominent factor has been growth differentials between emes and advanced economies. in figure 5, the left panel shows that capital inflows to emes picked up post - crisis, in line with the widening of this growth differential, while the slowdown in inflows after 2011 coincides with its narrowing. another related determinant has been commodity prices, as shown in the right panel. the pickup in both global growth and commodity prices over the past couple of years explains a good part of the recent recovery of capital flows to emes. 5 see, for example, wheatley and garnham ( 2010 ) and rajan ( 2014 ). studies looking at the determinants of eme capital flows include chari and others ( 2017 ), clark and others ( 2016 ), bems and others ( 2016 ), koepke ( 2015 ), ahmed and zlate ( 2014 ), fratzscher ( 2012 ), and - 4monetary stimulus by the fed and other advanced - economy central banks played a relatively limited role in the surge of capital flows to emes in recent years. there is good reason to think that the normalization of monetary policies in advanced economies should continue to prove manageable for emes. fed policy normalization has proceeded without disruption to financial markets, and market participants ’ expectations for policy ( the red symbols in figure 6 ) seem reasonably well aligned with policymakers ’ expectations in the summary of economic projections ( the black dots ), suggesting that markets should not be surprised by our actions if the economy evolves in line with expectations. it also bears emphasizing that the emes themselves have made considerable progress in reducing vulnerabilities since the crisis - prone 1980s and 1990s. many