gas emissions, responsible for supervising three quarters of the global systemically important banks and two thirds of systematically important insurers. the conference was the first milestone for the network. this year, the ngfs reached its second milestone : a report with six recommendations on how central banks and supervisors should contribute to paris. in short : central banks can play a catalyzing role in promoting responsible financial markets. as investors, they can strive to make the economy more sustainable by managing the environmental risks of their own reserves. de nederlandsche bank has, for example, signed the principles for responsible investment. in the financial sector, we would be considered laggards, as this is already standard industry practice. but in the central banking community, we were the first ever to sign the pri. the direct effects of our action may be limited, given the size of our investment portfolio, which is 19 billion euros, and given the composition, which is mostly government bonds. but we hope that others will follow, and collectively, the impact will be larger. and apart from the absolute number, we as central banks exert influence by leading by example. the starting point for supervisors is the risk perspective. as i said before, climate change and the transition towards a carbon - neutral economy are sources of financial risk. the financial sector is particularly exposed to physical risks and transition risks. physical risks refer to the damage of the catastrophic effects of climate change. assets may by ravaged by climate calamities. and the whole economy may be affected indirectly through weaker growth and lower asset returns. these risks are not just in the distant future. 2017 and 2018 were already the costliest years on record in terms of weather - related disasters. here in germany, the hot summer of 2018 caused the closure of parts of the rhine to commercial shipping, for the first time in living memory. the closure of this vital waterway shaved 0. 2 % off germany's gross domestic product. shipping restrictions were again in place this year following the record temperatures. so it looks like climate - related disruption is here to stay. even if you are skeptical about climate change or its causes, there is no escaping climate regulation. the risks of stranded assets are very real. this is what we refer to as the transition risk. financial institutions have significant exposures to companies that emit high levels of co2. pension funds and banks, in particular, are vulnerable to their carbon intensive assets suffering a sudden loss in value. here again, risks are already

’. once it awoke to the consequences of physical targeting during the course of the second plan, the rbi strove to trim the size of the subsequent plans to match visible resources. another illustration of differences between the government and rbi culminating in the resignation of governor rama rau in 1957 is well documented ( balachandran g, 1998 ). another major area of discord between the rbi and the government in the late 1950s related to the financing of the cooperatives and the pattern of organisation of the lending agencies. interestingly, during the early 1960s, governor iengar identified four areas of potential conflict between the bank and the central government. these were interest rate policy, deficit financing, cooperative credit policies and management of sub - standard banks. it may be of interest to note that currently, in the year 2001, these four areas are still on the top of rbi ’ s concerns. this phase, from nationalisation of the rbi in 1948 till nationalisation of major commercial banks in 1969, may be considered as maturing of the rbi into a full - fledged professionally managed central bank, perhaps one of the foremost in developing countries. the mid - fifties, however, did see the beginnings of serious erosion of autonomy in the monetary policy function due to the emergence of the system of ad hoc treasury bills and automatic monetisation. it was agreed that rbi would replenish government ’ s cash balances by creation of ad hoc treasury bills in favour of the rbi. the ad hoc treasury bills, which were meant to be temporary, gained a permanent as well as a cumulative character. indeed, it became an attractive source of financing government expenditures since it was available at an interest rate pegged at 4. 6 percent per annum since 1974, i. e., actually at a negative real interest rate. the third phase that changed the contour of this relationship started with the nationalisation of major banks in 1969. while the problems experienced earlier by the rbi persisted to some extent, the change brought about a curious situation where the government became owner of a number of banks, but the supervision of these banks was, in turn, conducted by the rbi which was also owned by the government. the situation, however, was not unique to india and was somewhat similar to that of france. the fundamental factor affecting the relationship was the combined effect of government ’ s ownership of major commercial banks and the persistence of high fiscal deficits, which posed serious problems for prudent monetary management. for easy access of market borrowing