firms have a vital role to play in these plans. they will have the best sense of the existence of impediments to a resolution plan, for instance the existence of negative pledges that could obstruct emergency lending and how to remove these impediments. second, firms must produce and maintain the information that is necessary to enable a resolution plan to be enacted, and understand the problems and issues that would arise in a resolution from the way their firm operates. the last point is critical – it is not a data dump process. there are two key objectives for resolution plans. first, to make it more straightforward and less costly for resolution authorities to resolve firms by creating a permanent state of readiness. second, as a means to deal with the “ too complex to resolve ” state by demonstrating where structures need to be changed. this is all about reducing the cost of resolution and thereby the risk to the stability of the system. just like recovery plans, resolution plans need to be there to be used, and i can assure you that the bank of england, in its role as a resolution authority, will be placing great emphasis on the existence of credible and useable resolution plans. they will be a tool for the authorities rigorously to ask the question, “ with this structure and business model, could i achieve a resolution at an acceptable cost ”. this will be true for domestic banks and for those operating across borders, and in the case of the latter there is a large amount of work to be done to ensure both complete coverage of resolution regimes and that they can work together. i have emphasised that i see rrps as a device to enable tough questioning of structures and business models. i want finally to illustrate the sorts of questions that should arise by referring briefly to a couple of well known cases of the last two years or so. let me start with northern rock, the first casualty in the uk and use this case to illustrate the role of a recovery plan. had there been one, the northern rock recovery plan should have challenged the management and the board on how its business model could adapt to and survive the closure of its key funding markets, given the sheer scale of its dependence on securitisation. likewise, how could it have handled a serious stress when it had pursued a business model of aggressively taking market share by squeezing its net interest margin and accepting more borrower default risk? and then moving further into the guts of the bank, how would it deal with stress to a

china. the second factor impeding financial market pricing of climate risk has been the long horizon over which that risk has historically been thought likely to crystallise. financial markets do not have a great track record pricing such longer - term phenomena, particularly when their scale and incidence is also uncertain – a failing to take just one example amongst many, ‘ make my money matter ’ was formed by richard curtis and jo corlett to drive change in pension fund investment : https : / / makemymoneymatter. co. uk /. for a recent discussion of these issues, see https : / / www. bankofengland. co. uk / speech / 2020 / anna - sweeney - moodys - the - resilience - ofinsurers - in - a - changing - climate for a recent central banker ’ s perspective on these points, including the case for establishing a global price for carbon, see the speech by isabel schnabel of the ecb at https : / / www. ecb. europa. eu / press / key / date / 2020 / html / ecb. sp200928 _ 1 ~ 268b0b672f. en. html all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice that mark carney has called the ‘ tragedy of the horizon ’. 11 but here, too, things are changing. climate risk doesn ’ t seem so hypothetical or far off to those gazing at red skies over san francisco, fleeing their burning homes in the australian outback, baling out flooded villages in the uk, or contemplating big writedowns in the value of their businesses ( as the boards of ford, vw, bp and shell, to name but a few, have done ). here, a combination of consumer action, government policy, and financial market pricing are bringing the future into the present. the final issue is the most prosaic, but perhaps also the most important from a financial markets perspective – and that is the historic absence of robust measurement. measurement of how much pollution specific companies, their supply chains and consumer markets, produce. and measurement of the extent, and efficacy, of remedial action. while financial performance and risk is measured, and audited, to the nth degree, climate risk has historically been a void. what isn ’ t measured can ’ t be priced, traded or risk managed.