in my intervention. i will begin by sharing first, in my personal capacity, some thoughts regarding the need for standards to evolve and keep pace with the times, whilst ensuring that new standards are not unduly burdensome and do not hinder firms ’ abilities to innovate. in this respect, i ’ d like to look forward and address some of the work we are doing to ensure that the new international capital standard - basel ii - remains flexible and able to adapt to emerging practices and risks. many of you have a very strong interest in the efforts the committee is undertaking to consider how best to apply basel ii to certain trading - related exposures using the latest tools being developed by the industry. while this work is still ongoing, i would like to share a status report with you on that effort. finally, i will highlight some of the work that we are undertaking to promote a smooth and consistent transition to basel ii, including our plans to conduct a review of the calibration of the framework, as well as our efforts in the field of supervisory co - operation and validation, and the key messages that are coming out of these initiatives. the evolution of standards and regulatory burden allow me to begin by sharing some personal thoughts on a topic that has captured some attention recently : the view, held by at least some in the financial services sector, that the tide of regulation has risen to a high water mark. in my own conversations around the world, i have heard similar concerns from some bankers. some point to the long debates that have taken place in the accounting profession. others point to regulatory reforms underway, such as those to transpose and implement the committee ’ s own work on basel ii, the new capital framework. it should be said that the industry itself recognises that there is work to be done in these areas. however, i do have sympathy for the sense that much is changing today. i understand that keeping pace with these changes can absorb resources and require attention. in this sense, and especially in relation to our work on basel ii, i see some merit in concentrating, at least for a while, on completing current regulatory work, and on ensuring the quality and consistency of its implementation. let me expand a little on this point. financial service providers often compete on their ability to create value by offering new products and services to customers. as just one example, isda represents institutions that are among the most active in the private negotiation of derivative instruments. these instruments are initially tailored to unique

a case in point is the mar menor, the largest salt - water lagoon in europe, on the south - eastern coast of spain, in the region of murcia. the mar menor is also a major tourist hotspot, with 7, 500 beds in the surrounding area and annual visitor numbers historically exceeding the 200, 000 - mark. however, since the 1960s the mar menor ecosystem has come under increasing strain with the growth of agriculture and tourism. this ecological degradation is primarily the result of the expansion of the agricultural sector and agri - food industry in the vicinity of the lagoon, particularly since the shift from dry - farming to irrigated crops ( now accounting for more than 80 % of the total area ). this deteriorated environment, combined with frequent climate change - related flooding and extreme temperatures in the region ( as high as 47°c in august 2021 ), has been a key factor behind the changes in the nitrogen and phosphorus nutrient cycles, leading to eutrophication ( i. e. an increase in biomass in a body of water ), and the widespread growth of algal blooms in particular. this massive expansion of algae ( dubbed the “ green soup ” ) meant that light can no longer reach the bottom of the lagoon. the plants on the lake bed die off, leading to an increase in decomposition caused by bacteria, which use up the available oxygen, thus killing the fish. a banco de espana paper by lamas et al. ( 2023 ) 15 shows that property prices in the surrounding areas took a sizeable hit once the locals realised the scale of the environmental damage in the mar menor. this realisation, which dawned some time after the actual 13 see the 2023 repo rt o n climate change risks o f the spanish macro prudential autho rity ( amcesfi ). t his analysis is carried o ut by po o ling data fro m the natio nal flo o dplain mapping system, develo ped by the ministry fo r eco lo gical transitio n and demographic challenge ( miteco ), the land registry and the banco de espana ’ s central credit register. 14 there is no evidence to sho w that the lo an - to - value ( ltv ) ratio is higher in areas at greater risk o f flo oding. 15 “ impact o f climate risk materializatio n and eco lo gical deterio ratio n on house prices