of financial analysis and risk management. in general, the basic tenet is that future outcomes will be drawn from the same population that generated past outcomes, so that the time average of future outcomes cannot be persistently different from averages calculated from past observations, and future events can be predicted with a certain degree of statistical accuracy. in non - ergodic environments, on the contrary, at least some economic processes are such that expectations based on past probability distribution functions can differ persistently from the time averages that will be generated as the future unfolds. 5 in case of acute uncertainty, no analysis of past data can provide reliable signals regarding future prospects. the challenges posed by the non - ergodic nature of economic systems may be met by recognizing that our models are by necessity “ local ” approximations of very complex economic and financial developments. one needs to be modest, using theory and empirical models as starting points for, not straightjackets in, our decision making. and perhaps not enough attention has been paid by the financial community to the need for establishing institutional and behavioural norms to reign on patterns of instability and developing proper learning devices to deal with major shocks and regime changes. these challenges are compounded by another general characteristic of the quantitative analysis of economic phenomena : the difficulty of running parallel worlds, i. e. producing data through experiments designed and controlled by the researcher. even when economic forces do follow repetitive patterns, it may not be easy to spot empirical regularities, because contingencies – especially the exceptional ones – cannot be re - created at will, in the laboratory, for cognitive purposes. our experience will always be limited, partial and episodic. these aspects are not always taken into account in economics or finance. as charles p. davidson, “ is probability theory relevant for uncertainty? a post keynesian perspective ”, journal of economic perspectives, 5, 1, 1991. bis central bankers ’ speeches kindleberger noticed : “ for historians each event is unique. economics, however, maintains that forces in society and nature behave in repetitive ways ”. 6 why is it that the parameters and laws governing economic systems tend to change over time? a distinction can be made between exogenous uncertainty, when an individual ’ s actions do not affect the probability of an event occurring, and endogenous ( or behavioural ) uncertainty, when they do. 7 in economic systems, this second type of uncertainty can be particularly important. this has not been sufficiently recognized, i believe, in

the task of maintaining an equitable representation of shareholders over time and will strengthen the ibrd legitimacy as a global player. the formula should reflect global economic weights and the contributions to the bank ’ s development mission. rewarding support to this mission is essential to building up adequate incentives for future contributions. any discussion of future resource needs to be preceded by a thorough conversation on the future positioning of the bretton woods institutions. a long - term vision of the role of multilateral financial institutions – and of the wbg in particular – needs to take into account the importance of engaging in the financing of global public goods and the benefits of cross - border integration. this requires the promotion of regional cooperation efforts. we should at the same time recognize that official development assistance represents only a small portion of global financial flows for development. the role of the wbg in enhancing the use of domestic resources – through technical assistance – should be intensified, and ifc and miga should bis central bankers ’ speeches strengthen their efforts to catalyze private sector capital into development projects. the time is ripe for updating the ida financing model. 3. a partner in climate change financing as we approach the cop21 meeting in paris, where decisions need to be taken to step up international action on climate change, we envision an important role of the wbg as a key partner in both promoting the transition to a “ greener ” economy and alleviating the impact of climate change on developing countries. this effort requires financial resources that largely exceed those available to development institutions and calls for combining limited public resources with larger private sources of capital. the wbg is strategically positioned to contribute to this effort. the problem of climate change falls in the domain of global public goods and posits complex intergenerational questions. as a global financial organization, the world bank is well - suited to address both these issues. furthermore, as a multi sector development agency, the bank should make use of its expertise in a broad array of policy areas to provide sound evidence that climate - smart projects are good development projects. 4. a sustainable development organization we welcome the substantial increase in wbg commitments. it is now time to deliver with an effective implementation of wbg projects. large, transformative development solutions require a focus on results and appropriate fiduciary and safeguards policies to manage risks. the ibrd should focus on financing long - term structural projects, even if the shift toward investment lending is likely to reduce the growth of the ibrd