right incentives and policies, emes could make a substantial contribution to mitigation efforts. also, given the current initial conditions, any amount invested in climate change mitigation in ems and ldc can have a larger decarbonization impact and thus a larger positive externality than in developed countries. a dollar invested in emerging markets and ldcs can have a higher mitigation potential, thus it makes sense to create the conditions for such investments to be made. it would be unfortunate if investments are not done for cost of funding reasons. according to a recent imf paper many of the world ’ s lowest - cost mitigation opportunities exist in emerging and developing economies. thus, it is in the global interest to make sure that these are pursued. however, the cost of capital facing emerging and developing economies is significantly higher than in advanced economies. 3 / 5 bis central bankers'speeches it is essential to move from a bad equilibrium with high financing costs and insufficient green investment, to climate friendly funding sources at scale for these countries at genuinely low financing costs. also, we need to acknowledge that emerging countries and ldcs have less space to spend on climate friendly projects than they had before the covid 19 pandemic, hence it is necessary to unlock attractive international funding from advanced economies at low interest rates in exchange for credible ghg mitigation. this will also increase the resilience of global financial system to climate risks. also, we need to develop innovative structures to diversify risk, through for instance, pooling a large set of projects in many jurisdictions backed with guarantee schemes or other de - risking solutions. blended finance structures can unlock private sector financing of the transition to a low carbon economy. also, aes ex - im banks could design new programs to unlock green investments in emerging and developing economies by offering long term loans with very attractive interest rates that could incentivize the adoption of state - of - the - art green technologies. this would allow emerging markets to leapfrog to modern green technologies, accelerating the mitigation of ghg. again, these efforts could be leveraged through mdbs loan guarantees. the imf has suggested the introduction of a minimum carbon price system, but adopting a onesize - fit all approach can face several challenges. in this regard, adjusting these minimum price for income per capita and carbon intensity could improve policy coordination and convergence. question 4. what role could be played by the imf and other multilateral development banks to foster

alejandro diaz de leon : remarks at a panel discussion on monetary policy challenges for emerging markets remarks by mr alejandro diaz de leon, governor of bank of mexico, at the s & p global ratings global emerging markets virtual conference 2021, central banks panel discussion : monetary policy challenges for emerging markets, 1 july 2021. * * * i. lessons learned by economic policy makers in emes from the pandemic the covid - 19 pandemic has been a human and economic crisis like no other. the novelty of covid - 19 and the tremendous uncertainty around the evolution of the pandemic made this crisis unique on several dimensions. it posed new challenges for policy makers, as we dealt with acute and persistent volatility in our financial markets. a deep economic contraction with a subsequent heterogeneous economic recovery, and currently with a high degree of uncertainty on inflation dynamics. our economic models and analytical tools were not designed to analyze crises like the present one, whose origin lies in a public health problem and not in the economic or financial cycle. in what follows, i would like to list several lessons along these lines. as central bankers, the first lesson was to address the financial shock and risk aversion spiral in a timely and decisively matter, to prevent a financial crisis. the financial shock hit during the first weeks of the pandemic, and it was necessary to adopt measures to restore an orderly functioning of financial markets. it is important to remember that, since their creation, central banks have had the responsibility of safeguarding the stability of the financial system. in their role as lenders of last resort, central banks have historically focused on providing liquidity to commercial banks. however, the development of increasingly complex and interconnected financial markets has posed new challenges for central banks. we had to design our policy response taking into account the new realities of our financial systems. this time the resilience of domestic financial sectors to adverse shocks, along with the liquidity provided by systemically important central banks, proved to be very important to stabilize international financial markets. in the case of mexico, the governing board embarked on a series of interest rate cuts and implemented a series of measures to provide ample liquidity ( up to 3. 3 % of gdp ), within its legal mandate in order to foster an orderly functioning of domestic markets and strengthen the economy ’ s credit channels. all measures were intended to set the conditions so that financial intermediaries could fulfill their primary function of providing financing to the economy