by the tcfd released in 2017, a proposal was made on the basic elements to be disclosed regarding the impact of climate change on finance. in this way, the tcfd has established a framework to help firms understand climaterelated financial risks and encourage disclosure. this framework is being used by an increasing number of firms. the fourth point in which much progress has been made is international cooperation. in recent years, international cooperation has been promoted to improve the methods for understanding and managing climate - related financial risks. the network of central banks and supervisors for greening the financial system ( ngfs ) has been playing a major role in such cooperation, and the bank of japan has been a member of this network. the ngfs has released climatechange scenarios, compiled guides for measuring risks using these scenarios, and identified future research issues. international organizations such as the basel committee on banking supervision and the financial stability board have also been advancing their deliberations on climate - related financial risks, which they consider to be a high - priority issue. iii. challenges to understanding and managing climate - related financial risks as our recognition of climate - related financial risks deepens, the extent of the challenges to our understanding and management of such risks has become clear. a number of complex issues must be tackled, such as the interaction between the two transmission channels mentioned earlier - - physical risks and transition risks - - and, moreover, the feedback loop between finance and climate change must be considered. this is one of the perspectives to be shared in this workshop. when it comes to stress testing, there are a number of difficulties in setting scenarios. for example, the time span until risks materialize is considerably long. there are even more problems on the practical front, such as insufficiency in data for measuring climate - related financial risks. therefore, for the moment at least, climate - related stress tests are thought to have different features and objectives from the standard stress tests, which are regularly conducted to examine resilience within a matter of only a few years against possible financial and economic shocks. iv. efforts made by the bank of japan given the potential size of the risks, the progress made to date, and the remaining challenges, how should the bank of japan establish a framework appropriate to managing these risks? i would like to point out three basic ideas. first, the size and number of challenges is no reason to delay addressing this issue. rather, central banks must take forward - looking steps and make steady progress

february 16, 2017 bank of japan building a more robust financial system : where are we after the global financial crisis and where do we go from here? speech at the dicj - iadi international conference haruhiko kuroda governor of the bank of japan introduction it is a great pleasure for me to be invited to the dicj - iadi international conference and to address all of you. thank you very much for this opportunity. it is almost ten years since the onset of the global financial crisis. at this juncture, i would like to look back on the efforts and results at the global level with the aim of preventing the return of the crisis, and offer my thoughts on the challenges ahead if we are to maintain the stability of the global financial system. in retrospect, the global financial crisis was triggered by problems in the u. s. subprime mortgage market. initial losses incurred by financial institutions and investors in that market led to a severe liquidity shortage through loss of confidence among market participants. subsequently, following the collapse of lehman brothers in september 2008, we had a full - blown crisis that destabilized the whole global financial system. responding to the ever worsening situation, economies around the world unleashed aggressive macroeconomic measures, injected massive liquidity into financial markets, and provided taxpayers'support to financial institutions, including capital injection, and these measures prevented a contagious amplification of the crisis. these efforts were complemented with measures developed through international cooperation so as to prevent the incidence of another crisis. as a result, the robustness of the global financial system has been greatly enhanced by, for example, higher capital and liquidity reserve levels at financial institutions, more options for liquidity provisioning by central banks, better legal frameworks for resolving financial institutions, and enhanced communications and cooperation among authorities. in the meantime, many central banks in the developed economies are pursuing extremely accommodative monetary policy, including unconventional policy measures, in order to extricate economies from low growth and low inflation. while these measures themselves are utterly essential responses to the conjunctural macroeconomic challenges, the resulting " low for long " environment is eroding lending margins, which are the sources of profits for financial institutions. considering that financial institutions in the developed economies have faced increasing pressures on their revenue streams, reflecting structural changes in the financial system, the low profitability of financial institutions has become a global problem to be reckoned with. building on