in line with our supervisory expectations. given the difficulties to assess the exposure to and the impact of climate - related risk we have not assigned to this exercise quantitative objectives, beyond providing participants and us with a first bottom up assessment of their exposure, based on common assumptions, assessment which appears to be moderate by 2050. in particular, we didn ’ t set as an objective to assess the extent to which the current regulatory framework is sufficient and well suited to absorb climate - related risks, and whether additional supervisory capital requirements would be legitimate. models, metrics and methodologies developed so far are still in their infancy and the data too sparse to allow drawing firm conclusions about the loss absorption capacity of current capital levels. nonetheless, we already see at the acpr these exercises as prudential tools, as they have proved helpful to us at incentivizing financial institutions to give the proper level 1 / 3 bis central bankers'speeches of priority and resources to the monitoring and management of climate - related risks. the publication in november 2020 of the ssm guide on climate and environmental - related risk was driven by the same logic and the preparation underway of an ssm stress test should provide an additional step at european level towards more supervisory scrutiny in the process of fully integrating these risks into the day - to - day risk management of banks. 2 - there are also a few lessons that can be drawn from our experience from a methodological standpoint, as the use of such scenario analysis by supervisors is likely to be repeated and is likely to spread among supervisors. i would like to highlight two of them. first, tremendous progresses have been made in the domain of climate risk scenarios under the aegis of the network of central banks and supervisors for the greening of the financial sector, the ngfss. thanks to this “ coalition of the willing ”, gathering today more than 90 central banks and supervisors across the world, high level scenarios were published in july last year, updated a couple of weeks ago by a set of 6 scenarios. this set of global reference scenarios provide a good basis for financial authorities. of course, the ngfs should continue to develop and refine those scenarios. however, there will remain the need to tailor those scenarios to the circumstances of each jurisdiction, for instance specifics of their climate policies, or more precise meteorological data at the national level. in addition, st may legitimately differ along other methodological dimensions. a case in point is the use or not of a dynamic balance sheet assumption

innovation and evolution in bond markets. i ’ ve hopefully given you a sense of how the bank is developing its approach, much in the same way that it has been evolving to the needs of the markets it operates in for the last 330 years. on the one hand we ’ re normalising our balance sheet, transitioning to a new normal that in terms of our participation will frame the environment for further innovation. and on the other, we ’ re actively working with the market to utilise the significant technological developments we ’ re seeing within the settlement infrastructure we operate. we are mindful that the shocks in recent years have shown that we cannot take stability for granted, and so one core principle underpinning all our work to innovate and evolve, as well as in terms of our direct participation in markets, is the objective to maintain monetary and financial stability for the good of the people of the united kingdom. i would like to thank johnny elliot, richard lewis, ed kent and rachita syal for their help in drafting this speech, as well as many other bank colleagues for their helpful comments and suggestions. 1. these data on balance sheet holdings are reported on an initial purchase proceeds basis, whereas the data displayed in chart 1 shows gilt holdings in market value terms. 2. bank underground ( 2019 ), ‘ the great war and the bank of england as market maker of last resort ’ 3. goodhart ( 2018 ), ‘ the bank of england, 1694 - 2017 ’ 4. kynaston ( 2017 ), ‘ till time ’ s last sand : a history of the bank of england 1694 - 2012 ’ 5. for further detail, see the bank of england ’ s quarterly bulletin article ‘ financial stability buy / sell tools : a gilt market case study ’ 6. for further detail, see andrew hauser ’ s speech ‘ ’ less is more ’ or ‘ less is a bore ’? re - calibrating the role of central bank reserves ’ 7. for further detail, see dave ramsden ’ s speech, ‘ quantitative tightening : the story so far ’ 8. the tfsme is a lending operation backed by collateral and is not indemnified by hmt. it is held on the bank ’ s balance sheet rather than in the apf. 9. the bank is also developing the liquidity tools it has for supporting financial stability. this includes building a new backstop facility capable of lending to non - bank financial institutions ( n