aspiration into action, across the financial sector and the real economy. this phase involves a lot of hard work : the collection of data and the building of new tools that better enable climate considerations to be embedded in strategy and risk management. 1 / 7 bis - central bankers'speeches and i finished with a hope that we were fast approaching the third and final phase – with these tools actively used in financial and business decisions to progress an orderly transition to net zero. since then, a global pandemic, a war and the fastest tightening in financial conditions in thirty years have meant that things have not panned out as we might have expected. let's take stock of where that has left us. taking stock my prism on this is as a central banker and regulator, where we have good sight of how the uk's banks and insurers are building their approaches to climate risks. these firms sit at the centre of the economy, and their responses matter. i have seen a step - change in their approach. they are making more serious investments in developing effective capabilities – both to manage climate - related financial risks and to identify opportunities. but are they enough? let me explore this across four core dimensions : scenario analysis ; firm risk management capabilities ; disclosure ; and green finance. learning from scenario analysis i'll start first with scenario analysis - an essential tool for understanding the size and pathways of unprecedented and uncertain future climate risks. the bank has delivered its first climate scenarios exercise, the cbes. in my view this was transformative, both in shining a light on otherwise opaque risks and in building capabilities. importantly, the exercise required firms to understand how their real economy customers were both exposed to these risks and the actions they would take to manage them. this was one of the most challenging aspects of the work – as it revealed gaps in real economy firms'understanding of what climate transition means for them. a gap i will return to. the cbes also showed that costs were lowest, and opportunities greatest, with an early and well managed transition. that underlines that while governments set public climate policy, banks and insurers have a collective interest in managing climate - related financial risks in a way that supports that transition over time. managing climate related financial risks second, interactions with banks and insurers had revealed them to be in the early stages of developing their climate risk management capabilities. to address this, we set the world's first supervisory expectations for climate risks in 2019 – expectations that became

and national authorities ), they are still relevant to the provision of liquidity to euro area markets over the longer term. 1 uk - based investment banks are also key providers of advisory and financing services related to securities issuance, m & a activity and syndicated lending to euro area clients. they play an active role in debt and equity issuance for euro area non - financial corporations, including book running and underwriting services. between 2012 and 2018, almost half of all debt and equity issuance for euro area non - financial corporations was carried out by global banks serving our market from london. our reliance on london also stems from the fact that, in some cases, the city represents a gateway to global financial markets for euro area financial and non - financial firms, allowing them to tap into global capital and liquidity pools. in other areas, however, reliance on london is quite limited. for instance, uk - domiciled banks play a marginal role in direct lending to euro area households and non - financial companies. had it not been for brexit, certain global and regional trends might even have led to an increase in the eu ’ s reliance on the city of london as a centre for market - based finance. indeed, the 1 / 5 bis central bankers'speeches balance between banks and non - bank financial institutions in the eu has been evolving in recent years : although still very much bank - based, our economy is increasingly financed by non - bank institutions. in the euro area, total assets held by non - banks have almost doubled over the last ten years, growing from €23 trillion in 2008 to €45 trillion in june 2019. non - banks currently account for around 55 % of the euro area financial sector. their fast growth reflects their expanding role in financing the euro area real economy. whereas in 2008 non - banks accounted for 14 % of the euro area financial sector ’ s loans to non - financial corporations, that share roughly doubled in a decade. non - banks provide a steady net flow of financing to non - financial corporations through the purchase of debt securities. regulatory decisions and economic drivers will affect the status quo these examples give a sense of the level of integration between uk and continental financial markets, in particular for certain complex and sophisticated financial services linked to derivatives markets and investment banking activities. however, brexit will change this status quo and a degree of decoupling is likely. it is difficult to make firm predictions about the extent to which our two financial systems may drift apart or remain