strong influence over inflation and employment, to ensure that the monetary policy objectives are achieved. efficiency the committee would take into account the distortionary impact of the tools on the efficient allocation of resources within the economy, including between various groups and sectors of the economy. financial system the committee would take into account the impact of the tools on soundness financial system risks, to avoid the costs of financial crises. operational principles public balance the committee would take into account the financial risks that the tools sheet risk would create for the reserve bank and crown balance sheets, to protect public funds and central bank independence. operational readiness use of the tools would take into account the operational readiness of each tool, to ensure the transmission channels function as expected. this includes the readiness of the reserve bank to implement each tool and the readiness of financial markets and the new zealand public to respond appropriately to the tools. source : rbnz. table 4 provides short descriptions of the tools themselves. our assessments are based on our own knowledge of the workings of new zealand ’ s financial markets, as well as international experience and academic insight. we will provide our full analysis of each of these tools against the principles we hold in coming weeks – so that people can fully understand our thinking and, of course, provide input. table 4 : unconventional monetary policy tools under consideration tools description forward guidance this would differ from our current approach of publishing our ocr forecast. it may involve publishing a forecast of the shadow short rate, which shows the combined stimulus from the ocr and other monetary policy tools through interest rates. it could also involve the mpc announcing a commitment to keep monetary policy expansionary, in order to hit our monetary policy targets in the medium term, even if the mpc expect this to eventually push inflation above 2 % or employment above its sustainable level. negative ocr reduction of the ocr to the effective lower bound ( the point at which further ocr cuts become ineffective ), which may be below zero. the reserve bank could consider changes to the cash system to mitigate cash hoarding if lower deposit rates led to significant hoarding. interest rate an interest rate swap is a contract where one stream of future swaps interest payments is exchanged for another. the reserve bank could enter into interest rate swaps to reinforce forward guidance. we would receive fixed rates and pay floating rates to financial market participants. this would reduce market interest rates. large scale asset the reserve bank could purchase domestic government bonds to purchases lower interest rates and contribute to a flattening

of central bankers and supervisors ’ achievements towards tackling climate change, which are significant and ( ii ) discuss four important tasks that still lie ahead. i. central banks and supervisors are promptly moving ahead regarding the snapshot of risks in its first progress report, released in bali in october 2018, the ngfs unanimously concluded that “ climate - related risks are a source of financial risks. it is therefore within the mandates of central banks and supervisors to ensure the financial system is resilient to these risks. ” so what do we do? a. integrating climate - related risks into micro - supervision this is an ambitious but complex task, on which progress has been made in many countries. looking at the potential courses of action for supervisors, i believe that our main priority should be the disclosure of existing exposures in the financial sector, what i usually call “ the snapshot of risks ”. a number of supervisors have paved the way, including the dnb, the bank of england / pra and the french supervisory authority ( acpr ). the acpr published last week a second report on the exposures of french banks and insurers to climate risks. this report gives a clearer view on climate risks and opportunities : asset exposures of financial firms to physical risks remains non - material in france thanks to investments in very low risk zones ; banks ’ exposures to transitionrelated risks were slightly reduced between 2015 and 2017 and now represent roughly 12 % of credit risk ’ s exposures at default. our supervisor also has a clearer view on the blind spots in the risk management framework, which must be addressed : executive bodies are committed to embracing further climate risks at the highest level of decision - making but the degree of implication across the french financial sector is still heterogeneous ; the granularity of the analysis provided by banks and insurance companies is not sufficient. this step should be widely promoted among ngfs members, who, i believe, need to leverage best practices throughout its membership. i therefore very much welcome the supervisory handbook that will be prepared as a ngfs technical deliverable for 2019 - 20. b. integrating sustainability factors into own - portfolio management central banks must send the right signal and lead by example in their investment and disclosure policies. the dnb has signed up to the un principles for responsible investment. norges bank, which manages the norwegian sovereign wealth fund, has advocated a diversification of the portfolio and is implementing a divestment strategy dedicated to selling off some oil and gas