bank should empower its staff and must always remain credible with the public. ( even though bagehot foresaw many things, even his liberal mind hadn ’ t foreseen the day when the bank would have more than one deputy governor, and among them a woman! ) 3. a balance sheet that has evolved to meet the needs of monetary policy from a £1. 2 million loan to the government in 1694, the bank ’ s balance sheet has grown a long way to its current size of £400 billion. as figure 1 shows, most of that expansion has come in the past 7 years, in large part reflecting the implementation of monetary policy since the financial crisis that started in 2008. maintaining credibility in the money we issue has been an objective of the bank from inception. since the early 1990s this has been pursued through an inflation targeting regime, and most of that period the tool of choice for monetary policy was interest rates. in the wake of the financial crisis and ensuing recession, however, bank rate was cut to a historic low of 0. 5 % – a level that was at the time considered to be the effective lower bound as further cuts could reduce the profitability of the banking sector and constrain the supply of credit to the economy. when more stimulus was needed, the mpc used a different tool – the asset purchase facility – to deliver the needed stimulus by expanding the balance sheet using newly created central bank reserves to purchase £375 billion of government bonds with a range of maturities out to 55 years. of course what was once considered radical has become mainstream by today ’ s standards. indeed other central banks have gone further as the circumstances of their economies have dictated. the european central bank and the bank of japan have stated their intention to purchase significant amounts of private sector assets, and some central banks have used their balance sheets to purchase other countries ’ assets with the aim of maintaining their exchange rate at a certain level. the key point is that even though interest rates had been the marginal tool of monetary policy for several decades, monetary policymakers never forgot that this was only one manifestation of the central bank ’ s unique ability to create narrow money. and when the effective lower bound was reached, stimulus could continue to be provided by expanding central banks ’ balance sheets in new ways. someone recently said to me that quantitative easing ( qe ) is “ like magic, ” as if central bankers are sorcerers with the capacity to conjure up economic miracles. i wish. in fact

most promising investment opportunities in the transition, providers of capital could measure and disclose : 1. the percentage of assets that comply with tcfd disclosure ; 2. the percentage of assets that are net zero - aligned ( “ paris aligned ” ) ; 14 see e. g. giuzio, m. et al. ( 2019 ), climate change and financial stability in the financial stability review of the european central bank, may 2019 ; and piera de silva, l. a. ( 2019 ) research on climate - related risks and financial stability : an " epistemological break "?, speech at at the conference of the central banks and supervisors network for greening the financial system ( ngfs ), paris, 17 april 2019. all speeches are available online at www. bankofengland. co. uk / news / speeches 3. progress on transition as assessed against industry - specific transition pathways to help identify the leaders and laggards in the transition ; and 4. degree warming potential of the portfolio, which assesses the quality of transition plans relative to the paris goals. firms such as aviva, axa and allianz have already voluntarily disclosed this information. they are now feeding into a tcfd group that is considering whether the warming potential, or any other metric, is the best way to measure the potential opportunities in the transition. for cop 26, we intend to leverage the success of existing groups and coalitions, like the net zero asset owner alliance, climate action 100 + and the un pri to build a large coalition of asset owners and asset managers who expect their portfolio companies to become net zero aligned. mdbs and innovative finance the work on reporting, risk and returns will put in place the foundations for private finance to help drive the transition to net zero, but much more must be done across the full spectrum of the financial sector. multilateral development banks and development finance institutions have essential roles in mobilising blended finance for adaptation, resilience and mitigation, especially in the communities most exposed to the devastating effects of climate change. as the secretary of state noted, we will be asking these institutions to develop robust implementation plans for paris alignment in the run up to cop26. we will also consider how to best channel the expertise, experience and ingenuity of the financial sector to develop innovative approaches to meet the biggest challenges in the transition to net zero. this will mean : 1. understanding which new financial products, such as transition bonds and transition