AUGUST 20, 2020 VICTORIA FORUM 2020
The Great Reset
Supporting the transition to a greener, smarter economy
Paul Beaudry
DEPUTY GOVERNOR
The pandemic, central banks and climate change
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COVID-19 is a shock and an opportunity
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Pivot to a greener, smarter economy?
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Focus here on climate-related issues
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Our contributions to scenario analysis
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To start: how we view climate change risk
Two sets of risks from climate change
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Physical risks: Damage or destruction caused by extreme weather/higher temperatures
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Transition risks: Costs involved in the move toward a low-carbon economy
Different roles in facilitating a transition
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Governments: setting environmental policy
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Corporate sector: investing in technology
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Households: shifting preferences/behaviour
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Financial sector: financing transition
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Central banks: smoothing the transition to
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ensure the financial system is up to challenge
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maintain economic activity close to capacity
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understand the potential economic effects
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Scenario analysis: a useful tool given uncertainty
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Scenario analysis describes plausible future pathways
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It is not what will occur, but what could occur
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Useful given the high degree of uncertainty related to:
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climate change policy
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technological development
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evolving consumer and investor preferences
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Scenario analysis framework
Delayed action leads to a disorderly adjustment
How to quantify macroeconomic and sectoral impacts?
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Global oil production could fall sharply
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Large structural shifts could occur across sectors
Looking ahead: scenario analysis and lessons of COVID-19
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Scenario analysis as a journey
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Multi-year process
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Time to build in-house expertise and tools and to address data gaps
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COVID-19 as a disrupter that offers new insights on climate change
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An example of a structural shock with broad impact worldwide
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If you knew 30 years ago that COVID-19 was coming, how would you prepare?
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Preparation can reduce risks
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Structural changes as we pivot to a greener, smarter economy
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Opportunity to employ scenario analysis
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