, stablecoins and the response from regulation 3 / 5 bis central bankers'speeches and oversight. but is this the road that leads to security and efficiency in tomorrow ’ s payments? or are there already new roads under construction that link previously distinct areas of the payment market? one of the first and most prominent examples was the announcement by facebook – or meta, as it is now known – to issue a stablecoin called libra, later renamed diem. although, this specific project has been abandoned ; meta only recently launched a pilot with paxos to allow stablecoin payments with its dedicated novi app from the united states to guatemala. paypal is also aiming to issue its own stablecoin. 2 visa and mastercard have both announced plans to offer stablecoins as part of their payment services. in short, governments and central banks worldwide are concerned about the prospect of billions of platform users exchanging fiat currency into private money that may become locked into private ecosystems of global players, calling monetary sovereignty into question. as agustin carstens, general manager at the bis, said only recently : “ let me be clear : it is undesirable to rely solely on private money. users may initially find great convenience in paying with a big tech global stablecoin. but in doing so they may be handing the keys to our monetary system over to private entities, driven by profits and accountable only to their shareholders and other insiders. such an arrangement could erode trust. a public good like money needs oversight with the public interest in mind. ” 3 yet, besides proper regulation and oversight, central banks around the world have been initiating projects with the ultimate destination of issuing their own digital currencies. while nigeria and the bahamas have already launched their enaira and sand dollar currencies, a dozen other central banks are piloting central bank digital currencies of their own, most prominently china. so far, the digital yuan has been distributed to a limited number of citizens to test its functioning. but, in the course of the 2022 winter olympics in beijing, which started on 4 february, locals as well as athletes and visitors from abroad should be able to try out the e - cny, presumably via fancy smart payment cards. last summer, the eurosystem, too, decided to explore the benefits and downsides of introducing a central bank digital currency, the digital euro, in greater depth. until mid - 2023, the eurosystem will be investigating use

and models. 1 / 4 bis - central bankers'speeches we have to scale back the use of backward - looking models fed with historical data. looking back does not help, because this does not fully reveal the economic and financial implications of climate change in the future. furthermore, there are a lot of uncertainties when dealing with climate risks. we do not know when and how physical risks will materialise. neither do we know what climate policies will be implemented at what time. what we need is to set up different scenarios that could be the reality of tomorrow. so we have to turn to scenario analysis to guide us. the ngfs has developed a set of climate scenarios that we regularly update and enhance. these describe – both qualitatively and quantitatively – different futures for the world, ranging from a hot - house scenario to a net - zero future or the scenario of a fragmented world. by comparing these scenarios and what they mean in terms of economic developments, we can assess the risks – and these paint an unsettling picture. without timely and appropriate climate action, physical risks could lead to a global output loss of around $ 15 trillion by 2050. 4 this means that the financial cost of standing by and watching is close to the size of the euro area economy. 5 whereas, so far our scenarios have focused on the long - term impacts, the ngfs is currently preparing scenarios that zoom in on the next three to five years – a timeframe that is key to decision - making by both supervisors and many investors. in short, the ngfs climate scenarios illustrate the scale of climate risk to the economy and the financial sector. this information is relevant for us as central banks and supervisors, and can also provide a valuable signal for the wider financial markets. 2. 2 climate transition plans while global warming continues, the number of droughts and floods, hurricanes and wildfires will increase significantly over the next years. at some point, we will see tougher climate policies in place that will affect business models in many industries. it is crucial that corporates are prepared for these climate policies. otherwise, their business models, including their profitability, might be significantly affected. many market participants understand this transitional risk already. that is why they are increasingly calling for robust transition plans. these plans lay down the concrete steps and milestones on businesses'respective journeys to net zero. here, businesses can draw on frameworks such as the one provided by the tpt ( transition plan taskforce )