with the call by the leaders of the group of twenty ( g20 ) in april 2009 to strengthen accounting recognition of loan loss provisions by incorporating a broader range of credit information. one of the consequences of this new framework is the fact that while, in the past, a loss event had to have occurred before an impairment was raised by a bank. the standard now requires that loss provisions be raised earlier and take into account not only past and present page 3 of 9 information but also forward - looking information, which emphasises the future probability of credit losses in determining them. this standard is aimed at resolving the weaknesses identified during the global financial crisis of ‘ too little, too late ’ referred to above, and this will hopefully result in a more robust financial system that is more resilient and hence better able to withstand shocks. the adoption of ifrs 9 will give rise to higher levels of credit impairments. a study undertaken by the european banking authority estimated that the implementation of ifrs 9 would give rise to an average increase of 13 % in loss provisions compared to the current levels under ias 39 ; it is further expected that the core equity tier ( cet ) 1 ratios will decrease by an average of 45 basis points. smaller banks, which mainly use the standardised approach to measuring credit risk, estimate a larger impact on their own fund ratios than the larger banks. estimates of the exact impact differ, however, and only time will tell which of these estimates was accurate. there are those that argue that the adoption of ifrs 9 may in fact increase procyclicality, because during recessionary conditions there may be a sharp fall in cet 1 capital levels and this, in turn, may lead to a sharp easing in credit extension due to the so - called ‘ cliff effect ’ of the staged approach prescribed by ifrs 9. others, notably the bis, reject this argument on the basis that banks, after the global financial crisis, are now better capitalised with higher buffers and thus are better able to absorb losses. they further argue that the early loss recognition of credit losses enables a quicker ‘ clean - up ’ of banks ’ balance sheets, thus enabling them to support economic recovery. this debate is clearly not yet settled and we will need to wait and see how this plays out during the next recession. the economic impact is, however, not only limited to the level of losses and the timing of the recognition ; the implementation of ifrs 9 is also likely to impact on the

launch of the ngfs conceptual framework “ to guide action by central banks and supervisors on nature - related risks ” – paris, 7 september 2023 speech by francois villeroy de galhau, governor of the banque de france page 1 sur 5 ladies and gentlemen, it is a great pleasure to introduce, together with dnb ’ s president klaas knot, this ngfs conference that launches its conceptual framework on nature - related risks. one year ago, we were together in amsterdam for a pioneering conference on biodiversity from a central bank and supervisor perspective. at the time, our grasping of nature - related risks was roughly the same as on climate change some years earlier, and we acknowledged the need to refine our understanding and methodology. indeed, our economic reliance on natural resources such as wateri, and more broadly on services provided by nature and, at the same time, the impact our economies have on nature, are becoming more and more obvious and are increasingly documented. as ravi menon, chair of the ngfs, stressed it recently, “ along with the climate crisis, the nature crisis is the existential challenge of our times. we cannot focus on one and hope the other will take care of itself. ” ii the new conceptual framework released today by the ngfs therefore marks an important milestone. it offers a shared language and sketches out a common method to assess nature - related financial risks and ensure that our collective work is both consistent and joined up. the common understanding we have reached together is both science - based and geared toward bridging the gap with assessing the economic and financial implications of nature - related risks. as frank elderson recently put it, “ this is not some kind of a flower power, treehugging exercise. this is core economics. ” iii according to one estimate, reversing the decline in nature loss could require approximately 500 billion dollars per year until 2030, while the world currently spends less than 150 billion dollars on nature conservation and harmful subsidies represent 300 billion dollarsiv. whatever the right figures, the gap is such that it is all the more important that financial actors start acting on nature - related risks to shift nature - blind financial flows. at banque de france, we have started doing so through our sustainable investment policy by partnering with a data provider to page 2 sur 5 carry out a detailed assessment of impact on biodiversity of the equity and corporate bond components of our non - monetary portfolios. as you can see, the impact of our equity portfolios