assessment of the future levels of inflation and unemployment. i find it helpful to summarize the relevant information in what i term a mandate dashboard. the dashboard provides real - time readings on current and expected inflation and unemployment. here ’ s what the dashboard looked like in the fomc meeting earlier this month. i ’ ll explain the dashboard starting with the inflation side. the first cell from the left is current inflation. the second cell is what inflation is projected to be in one year ’ s time. finally, the third cell contains a forecast for inflation in two years ’ time. the unemployment side is similar. the first cell from the left represents current unemployment. the second cell represents a forecast for unemployment in one year ’ s time, and the third cell is a forecast for unemployment in two years ’ time. of course, i have to be a little more precise in what i mean by inflation and unemployment. by “ inflation ”, i mean the change in the personal consumption expenditure price index over the preceding four quarters, excluding changes in the prices of food and energy. 1 hence, my measure of inflation in the dashboard is what is commonly called “ core inflation ”. i ’ m using core inflation because i view it as a good measure of overall inflationary pressures over the next two to three years. by “ unemployment ”, i mean the unemployment rate averaged over the three months in the current quarter. 2 the forecasts for future inflation and unemployment are the midpoints of the central tendencies of the projections of fomc participants that they released in november. it is important to note that the dashboard includes information from other current variables besides inflation and unemployment. the forecasts for inflation and unemployment could potentially be based on a wide range of information – anticipated changes in fiscal policy, changes in european financial markets and so on. so, basing policy on the mandate dashboard does allow policy to react to changes in these other economic variables. the fourth quarter of 2011 has not ended. hence, what i ’ m calling “ current inflation ” is actually the fomc ’ s projection of inflation from fourth quarter 2010 to fourth quarter 2011. with three quarters of data already in, this projection is likely to be an accurate one. the fourth quarter of 2011 has not ended. hence, what i ’ m calling “ current unemployment ” is actually the fomc ’ s projection of the average unemployment rate in this quarter. bis central bankers ’ speeches however, using this kind of dashboard does require monetary policy to

a very long - term perspective, and where the presence of non - linearities and irreversible tipping points are likely, conditioning the methodologies to be used. and there is limited research, and accompanying data, that explore how climate risks feed into the financial risks faced by banks. in this context, many supervisory and / or prudential authorities are opting to use stress tests and scenario analysis. the bank of spain is indeed preparing such stress tests for the spanish banking sector and the results are expected to be published in autumn. a pigouvian tax is assessed against private individuals or businesses that engage in activities with adverse side - effects for society that are not internalised by these private agents, as a result of not being an integral part of the costs and prices they face. in any case, recognition should be given to the fact that the efficacy of pigouvian taxes may have a limit. this is because, at some point, the supply of polluting energy inputs may be so elastic that it absorbs all the taxes levied on them, without affecting demand. at that point, quantitative restrictions could become the best option. as a result, we should accept that efforts to translate climate - related risks into quantifiable financial risks are in their early stages. and we will have to step up our efforts to address these problems and limitations. it ’ s also crucial that these efforts are coordinated at the global level, given the global dimension of the risks and the potential spillovers that can arise through interconnections between the real and financial sectors. in this regard, at the basel committee on banking supervision ( bcbs ), we are conducting a “ gap analysis ” to identify areas in the current basel framework where climate - related financial risks may not be adequately addressed or are not captured. this gap analysis will be comprehensive in nature, and will cover regulatory, supervisory and disclosure elements. building on the analysis, we plan to explore practical solutions to address any identified gaps. in addition to a set of principles or guidelines on effective supervisory practices for assessing climate - related financial risks, the committee will explore whether any policy measures under the regulatory framework should be taken, and how the basel committee could support international efforts related to the development of globally consistently sustainability reporting requirements. importantly, any changes proposed by the basel committee to its regulatory framework would be in pursuit of its mandate to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability. as to monetary policy,