Guy Debelle: Priorities of EMEAP and update on Global FX Code of Conduct

Speech by Mr Guy Debelle, Deputy Governor of the Reserve Bank of Australia, at the ASIFMA (Asia Securities Industry & Financial Markets Association) Compliance Week 2021, Virtual Conference, 9 September 2021.

Central bank speech  | 
10 September 2021

Thank you for giving me the opportunity to summarise the current focus areas of EMEAP. I will also take the opportunity to talk about the recent update to the FX Global Code, in my capacity as Chairof the Global Foreign Exchange Committee (GFXC).

Two focus areas of EMEAP are sustainable finance and fintech. Collectively as well as individually, the central banks of EMEAP are doing a lot of work in both of these spaces.

Sustainable finance

The central banks of EMEAP have been increasing their focus on sustainable finance for some time now. We are now all members of the Network for Greening the Financial System (NGFS). A numberof us have contributed to the output of the NGFS.

Our work in sustainable finance has a number of elements:

  • Conducting climate risk assessments. Increasingly, we are all integrating climate risk into our supervisory activities. In that regard, we are embarking on climate vulnerability assessments of the financial system using scenarios based on the NGFS scenarios. At our recent meetings we have shared insights from our experiences in developing and implementing climate risk stress tests and scenario analyses for banks, and discussed the challenges they pose.
  • Taxonomies. There is a need to develop taxonomies that are appropriate to the various circumstances facing our economies, rather than having one being imposed that does not take into account the particular challenges facing economies in the EMEAP region. In particular, we are discussing the development of a transition taxonomy or taxonomies for currently 'green', but also to direct financing in a way that supports the transition to a sustainable future.
  • Developing green finance. How we can facilitate the further development of green finance is one of the other main priorities of our sustainable finance agenda. As a start, EMEAP members have agreed to promote investment in green bonds through the Asian Bond Fund, such as revising the bond index rules.
  • A common issue we have encountered in our work is the lack of data. This is being addressed at the global level by the International Monetary Fund (IMF) and the NGFS.Another issue is that stress testing and scenario analysis can be methodologically difficult because of the long time horizons associated with climate risks. But at the same time,climate change is having near-term implications in a number of our economies. While these exercises are challenging, we all agree that there is benefit in conducting them. It is important that the perfect doesn't get in the way of the good.