an area of continuing innovation and exploration around the world, and one that we are beginning to consider its relevance for new zealand. for now, the reserve bank is reviewing how best to support, steward, and facilitate access to physical cash and we will continue to engage with the banking sector in order to effectively meet customer demands. for example, we have recently created a new department – the money and cash department – to think broadly about a future that serves the money and cash needs of new zealanders. this includes smarter ways of cash distribution, as well as innovative solutions to emerging risks noted above. financial inclusion and te ao maori financial inclusion has become an increasingly important part of the reserve bank ’ s policy agenda in our capacity as a council of financial regulator member and our own te ao maori strategy. the strategy helps to guide the bank in understanding the unique prospects of the maori economy, how maori businesses operate, and what lessons the bank may learn in setting systemically - important policy with this view in mind. an important part of the strategy is making clearer the unintended consequences of our policies on unique economies like the maori economy. the covid - 19 pandemic has demonstrated the disproportionate impact of such economic downturns on both maori and pasifika communities. these compounding economic impacts have necessitated the reserve bank proactively reaching out to its regulated entities, government and maori partners to form a fuller view of the issues. the feedback has highlighted a role for banks in bolstering financial inclusion through greater access to capital to alleviate the financial stress of these unique economies. for example, finding innovative ways to manage the difficulty of securing lending against collectively - owned land could yield significant benefits. as with the needed credit response to the pandemic, there is opportunity to enhance both soundness and prosperity objectives, so that a more diverse spectrum of new zealanders are being serviced by their banking sector while still prudently managing the risks at hand. climate risk climate change and the increased frequency of severe climate events will have a significant effect on new zealand ’ s economy. the financial system ’ s exposure is primarily through the sectors that it lends to and insures. the financial sector will be affected by both the physical impacts of climate change ( through damage to property and changing property values ) and the transitional impacts caused by the shift to a lower - carbon economy, such as regulatory changes and changes in consumer and investor preferences. both these physical and transition impacts pose serious risks to

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