extremely difficult to identify, price, allocate, and manage with accuracy. 1 https : / / www. bis. org / review / r151009a. pdf 2 https : / / www. rbnz. govt. nz / research - and - publications / speeches / 2019 / speech2019 - 07 - 11 # fn7 ; https : / / www. rbnz. govt. nz / about - us / the - journey - of - te - putea - matua - our - tane - mahuta in the jargon, ‘ market failure ’ is rife. we simply do not know the true scope and scale of the environmental risks we take on during our daily economic activities. likewise, many of the material costs of our economic decisions are ‘ externalised ’, that is, borne by others including future generations. there is no obvious market or price for selling climate risk, and hence no personal reward for managing it. and market participants often take a short - term, myopic, view in their decision making, pushing longer term problems to the never - never. what this means is that we will never have perfect information on the risks of climate change. however, firms ’ disclosure on how they identify and manage climate change risks greatly assist to sharpen our focus. after all, it is what gets measured that generally gets managed. and it is far often better to imperfectly measure something than ignore it completely. what we already know is that climate change holds far - reaching implications for new zealand ’ s financial system. these implications include physical impacts such as sea level rise and drought. for example, the national institute of water and atmospheric research ( niwa ) estimates $ 12. 5 billion of property is already exposed to extreme coastal flooding in new zealand, and that each 10cm of sea level rise puts another $ 2. 4 billion of assets at risk. 3 climate change also implies transition impacts - such as ‘ flight shame ’ or a shift to plantbased protein that will pose unique challenges for our highly concentrated export economy. agriculture is already staring down the challenge of a triple whammy : emission pricing, changes in consumer demand, and more extreme weather. the reserve bank ’ s climate strategy our climate strategy at the reserve bank has three avenues : incorporating the impact of climate change into our core functions ; managing our direct impact on the climate ; and leading through experience and collaboration. firm disclosure of climate risks assists all three avenues. disclosure will

two days have stressed the necessity of prudential supervision of the banking system in the face of a credit boom. even though financial deepening and capital inflows bring about long - term benefits that can hardly be overstated, in the short to medium run they can lead to imbalances and distortions that pose a threat to the macroeconomic stability of a country. we have recently seen how badly lax lending and improper credit risk management can end in developed countries. in the case of converging economies, which are generally more financially vulnerable than fully - fledged market economies, it is all the more important to closely monitor risks to the financial system, enhance cooperation between financial institutions and supervisory authorities, and impose prudential constraints on lending. * the ideas that i have summarized so far were expressed in the papers prepared and presented by economists from academia, central banks, and international financial institutions. we have also heard important voices of top commercial bank executives and central bank governors during the panel that has just ended. household credit, and mortgages in particular, will remain an important source of revenues and profits for commercial banks. at the same time central bankers and banking sector supervisors will likely watch credit developments very closely to make sure that best lending practices are in place. in closing, i would again like to thank you all for attending the conference. i would like to thank the organizing committee and the nbp staff for their excellent work. i hope to meet you again at another conference organized by the national bank of poland. thank you.