reserve system ”. ( par. 76 ) without going into the details, in the south african system the reserve bank uses its open market operations and other instruments of monetary policy to force banking institutions to borrow more from the discount window whenever it is regarded as necessary to apply a more restrictive policy. at some stage, the reserve bank will then also raise the bank rate which, in a situation of great dependence on the central bank, will force the private banks to follow with increases in their lending and deposit rates. many other central banks operating in sophisticated financial markets are now influencing short - term interest rates more directly with their operations in the markets. instead of overnight loans provided at the discount window, they enter into repurchase transactions with banking institutions, with the added advantage that it can be coupled with a tender system for central bank money, and a variable bank rate. the south african reserve bank will also have to introduce greater flexibility in the operating procedures for the implementation of monetary policy if we want to cope with the volatile international capital flows, exchange rate changes, and financial assets price movements. it is of some concern to the reserve bank that over the past year interest rates in the south african money market seem to have become more rigid. in the present system, the bank no longer gets reliable signals from market interest rates on changes in the underlying financial conditions. if necessary, the operational procedures of the bank will have to change to bring more interest rate flexibility into the money market. finally, the instruments used for monetary policy may also have to be adapted to the changing financial environment. in the past, the reserve bank, for example, often used the exchequer account of the government for the short - term withdrawal of surplus funds from the money market. the recent introduction of an improved system for tax and loan accounts held by government with private banks, rules out the extensive use of this instrument for monetary policy purposes. similarly, arrangements now under negotiation with the department of finance to relieve the reserve bank of the responsibilities for the primary issue of government bonds, and for the development of the secondary market in these bonds, will also change the bank ’ s position in the capital market. it opens up the way for the bank to have a more single - minded open market policy approach. the introduction of repurchase transactions in strictly defined acceptable underlying financial assets will also provide an instrument of monetary policy that is more malleable and can be adapted easier to the needs of the new financial environment of which south africa is now rapidly becoming an

, enforcement will come into view as a viable option. as i said, more and more financial institutions have indicated they want to go beyond managing climate - related risk. they want to actively contribute to the green transition. and that brings me to the topic of impact investing. the world bank defines impact investing as an approach that aims to contribute to achieving measurable positive social and environmental impacts. an approach that looks to the future instead of to the past. impact investing and lending creates a significant opportunity to mobilise capital into investments that target measurable positive social, economic or environmental impact alongside financial returns. so what exactly is the difference between impact investing and traditional investing? traditional investing aims for financial value, seeking an outcome on the risk - return curve known as the efficient frontier. esg risks could be taken into account as a first step, meaning that companies assess the potential financial consequences of physical or transition risk events when looking at the risk - return curve. this is what dnb expects from the financial institutions we supervise, and this is generally known as taking'single materiality'into account. to truly move towards impact investing, this two - dimensional framework changes to a three - dimensional one, as ecological and societal impacts are included in an investment decision. the sum of financial, ecological and societal value forms the target variable for optimisation. or, in a slightly'lighter'form, some minimum requirements for the ecological and societal impacts are formulated when optimising for the financial value. determining an impact value is not always an easy process, but increasingly quantitative methods are being proposed, for instance by dirk schoenmaker and willem schramade in a corporate finance book they published last year. in essence, they propose to find a monetary value and a quantity for the impact a financing decision has ( or the harm it does ). think of the cost of a tonne of co2 emitted, or the shadow price of a life year saved by a certain new medical technology. the resulting annual value streams can be discounted with a similar discounted cash flow model that is used for financial flows, although the discount rate may be different. the three - dimensional approach makes it possible to arrive at an integrated value, where financial value and impact value are taken together. but let me stop here with the technical elaboration and recommend that you read willem and dirk's book if you want to know more. 3 / 5 bis - central bankers'speeches putting this into practice is complicated.