sales. in response to one of the ieo review ’ s recommendations the on page 36 of the bank ’ s 2019 / 20 annual report. the bank has £5. 8bn of total capital of which £3. 5bn is loss - absorbing. ultimately, the bank is fully backed by hmt, who have committed to replenishing the bank ’ s capital in those extreme circumstances where the bank could take a material loss. the exchanges of letters between the chancellor and the governor confirming the indemnity arrangements are available on the government and bank of england websites, as is the exchange of letters agreeing the cash transfer arrangements. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice bank will publish later in 2021 updated analysis of how such factors are likely to influence the size and direction of future transfers. 25 certainly the transfers are material and worth highlighting – but they are a side - effect of qe, not its goal. qe and climate considerations a second aspect of qe that has received close external scrutiny is its relationship to climate change. responding to climate change is a strategic priority for the bank ; we continue to work towards promoting safety and soundness by enhancing the prudential regulation authority ( pra ) ’ s approach to supervising the financial risks from climate change, and towards enhancing the resilience of the uk financial system by supporting an orderly market transition to a low - carbon economy. in particular we have supported the financial stability board ’ s work on climate disclosure through the task force on climate - related financial disclosures ( tcfd ). to show its commitment last june the bank published a report disclosing for the first time its own approach to climate risk management for all its operations. 26 attention, however, has understandably focused on the £20bn corporate bond purchases that form part ( around 2 % ) of our qe programme, and whether more should be done to account for climate considerations in these holdings. our approach to date has been to invest in sectors in proportion to the total outstanding eligible issuance accounted for by each sector in the uk economy. 27 an important part of the design of the cbps back in 2016 was to achieve the mpc ’ s aim of imparting monetary stimulus in a way that was sector - neutral, consistent with the remit given to the committee by the chancellor. as a result, the carbon footprint of the apf corporate bond purchase scheme

, though, pose the question of what happens when a firm ‘ fails ’ a stress test. and at this point, i need to broaden these remarks to the international scene and how that is affecting our relationships with business. part 3 : policy in a global setting • this country believes in free trade and open financial markets. our financial system is highly integrated with the global system. • that means that some firms domiciled or operating in the uk are global, and many are international. creates a huge need for a level playing - field internationally. that is a common interest of business and the authorities : • business : want to be able to compete more or less anywhere on equal terms with local, indigenous firms and with international firms from other countries. • authorities : want good standards on top of that. not only because we need them at home. the uk / london needs good standards abroad too : problems in the international financial system almost anywhere in the world will blow through london and the uk to a greater or lesser extent. and vice versa. financially, we ’ re the opposite of an island. • up to a point we can mitigate that by measures such as hmg ’ s planned ‘ ring fencing ’ of retail banks, which has the effect of separating domestic intermediation from the entrepot. but the non - ring - fenced banks matter for stability too! so we can ’ t just leave it there. • that gives uk a massive incentive to achieve good outcomes in international standards for financial regulation. • so far in this argument, so good – business and the authorities together pointing in the same direction. ie business will happily live with what i ’ m calling ‘ good ’ standards provided they are applied evenly everywhere that matters. • but two issues remain. first, business is frustrated by the time it takes to reach such international agreements. they want speed. they make the compelling point that they can ’ t determine their business models and plan their strategies until they know the regime under which they will function. • the international community finds that hard. contrast yesterday ’ s world of a small handful of central bank governors deciding bank - capital standards on their own : a world of g5 or at most g10. today ’ s world is g20 plus. and, as capital markets have become more important, securities regulators are rightly also at the table – and finance ministries too given the social and political issues. the result is a big table. ( fsb plenary – c