remarks by javier guzman calafell, deputy governor at the banco de mexico, at the panel on “ developing sustainable capital markets : mapping the challenges and setting priorities ”. omfif – dz bank, washington, dc, october 19, 2019. 1 i thank the organizers for the invitation to participate in this panel. mainly as a result of increasing carbon dioxide and other greenhouse gas emissions that have come about as a byproduct of economic activity at large, but particularly in sectors heavily reliant on fossil fuels, global temperatures are at present higher relative to pre - industrial levels, and are projected to rise further in coming decades. in addition to the environmental, health and broader welfare costs that such damage is already impinging, climate - related risks are among the main threats faced by the world in the medium - to longrun, especially in view of scenarios with potentially catastrophic and irreversible consequences, which are currently envisaged as plausible. given the complex and multidimensional nature of the issue at hand, as well as the extensive and, to a significant degree, unknown ramifications that may ensue, any sensible proposal with realistic chances to effectively contribute to a solution must contemplate the simultaneous and coordinated action of diverse, albeit complementary, policy tools. in addition, even though unilateral efforts at the domestic level are essential, international cooperation is needed to successfully overcome these challenges. why is the involvement of central banks in these issues important? the views and opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the institutional position of the banco de mexico or of its board of governors as a whole. to start with, climate change is expected to have substantial macroeconomic consequences in coming decades, as it will adversely affect output in a number of sectors. the most severe impact will fall on climate - sensitive sectors, such as agriculture, forestry, coastal real estate and tourism. this may also be reflected on global inflation, to the extent that agricultural and other prices fluctuate more widely, as a result of more frequent and more severe extreme weather events. it is also worth noting that although vulnerabilities vary across countries, those that will likely be most exposed to these risks are among the group of developing economies, in view of the sectoral composition of their gdps, their geographical location, their poverty levels and a more limited capacity to adapt. average estimates of the impact of a 3 degrees celcius

indicators highlight slower expansion in the mexican economy, largely caused by global economic weakness. by next year, as the external environment improves, mexico ’ s economic activity is expected to post a healthier pace. also, in the medium term, structural reforms could enhance productivity. the financial volatility of the last few weeks has had significant implications for emerging markets. adjustments in mexico have been orderly. in the face of the possibility that uncertainty may continue, prudence should prevail on the part of creditors and debtors, and the authorities should remain alert in order to ensure that at all times financial markets operate normally. finally, an increase in annual inflation so far this year is due to negative supply shocks, reflected especially in the noncore component of the cpi. given the temporary nature of recent pressures, it is likely that inflation will soon resume a downward trend toward the 3 percent permanent target. bis central bankers ’ speeches