modify the standard contract for derivatives while consulting with market participants. on the other hand, for " cash products " such as loans and bonds, unlike derivative transactions, there is no standard contract that is widely used internationally. accordingly, each jurisdiction needs to take measures to deal with the discontinuation of libor in those transactions. in this regard, in japan, the cross - industry committee on japanese yen interest rate benchmarks consisting of financial institutions, institutional investors, and non - financial corporates was established in august 2018, with the bank of japan acting as the secretariat, and it has been conducting deliberations. last summer, as a key milestone in the committee ′ s work, a public consultation was held on the appropriate choice of alternative benchmarks to jpy libor. during that consultation, many comments were provided on the issues presented by the committee from a wide range of relevant parties, including non - financial corporates. as a result of that public consultation, 3 a " term reference rate, " which would be calculated based on future expectations of the japanese risk - free rate ( uncollateralized overnight call rate ), received the most support as an alternative benchmark to jpy libor for both loans and bonds ( figure 5 ). there are several reasons for the strong support for the term reference rate : it is not affected by bank credit risk ; it would be " fixing in advance " like libor, which would allow users to determine the base rate before entering transactions ; and it is highly compatible with current conventions and operations. it is expected that the initiatives toward a transition to the term reference rate will be promoted for transactions that currently use jpy libor. deliberations outside of japan what are the developments of discussions outside of japan to deal with the possible discontinuation of libor for loans and bonds? in the united states and the united kingdom, for example, with respect to certain loans, it seems some market participants have indicated that they want to use term reference rates for each currency. meanwhile, given that term reference rates have not yet been developed sufficiently, financial authorities are strongly encouraging the use of compounded overnight risk - free rate fixing in arrears rather than waiting for the development of term reference rates. this stance by the u. s. and the u. k. authorities represents the urgency with which they are promoting a timely transition from libor to alternative benchmarks in light of the limited time until the end of 2021. iii.

is initiatives by financial institutions to address climate - related financial risks. proper assessment and management of physical and transition risks through scenario analysis are becoming a more important challenge for financial institutions. it is necessary for them to understand both climate - related risks and opportunities appropriately and to conduct their business and risk management on that basis. the second perspective is financial intermediation and capital market development when addressing climate change. new investment and finance for the transition are essential in pushing ahead with decarbonization realistically without compromising social welfare. there is therefore likely to be substantial demand for funds in the corporate sector. to meet such demand efficiently, financial institutions and investors should be able to assess appropriately the risks and returns of their investments, taking the effects of measures to address climate change into account. as a basis for this, it is very important to work on information disclosure. i hope that discussions at this meeting will contribute to improving the effectiveness of financial practices in addressing climate change. concluding remarks in conclusion, i am confident that this meeting will facilitate vibrant discussions and valuable insights, allowing us to deepen our understanding of the challenges confronting the apac financial system. reflecting on history, we recognize the numerous financial crisis episodes that have occurred. the current stability of the apac financial system results from continuous efforts by relevant stakeholders, drawing from the lessons and experiences of past crises. now, our pivotal mission is to pass on these invaluable lessons and experiences from the present to future generations. i am certain that the apac financial system will remain a cornerstone of the region's economy, characterized by its significant growth potential. the bank of japan remains 4 / 5 bis - central bankers'speeches committed to strengthening coordination and collaboration with all stakeholders to ensure the stability and resilience of the financial system for the future. thank you for your attention. 5 / 5 bis - central bankers'speeches