As Disasters Mount, Central Banks Gird Against Threat of Climate Change
From the Bank of England to the People’s Bank of China, monetary authorities of the world’s largest economies are gauging how climate change could rock the financial system. Though long committed to being “market neutral,” some are even starting to push greener investments.
Climate change is rattling the world’s central bankers. With unprecedented heat and wildfires in the American West and southern Europe, and record floods racing through German towns and Chinese megacities in recent weeks, fears are growing among regulators of a coming cascade of climate-induced economic blows potentially more far-reaching and intractable than the financial crash just over a decade ago.
In the past two months, the central banks of the world’s five largest economies — the United States, China, the European Union, Japan, and the United Kingdom — have all raised the stakes in their demands for the commercial banks they regulate to make public the looming risks they face as wild weather takes hold.
Their calls show that central bankers are already responding to concerns about their past passivity on climate — concerns reflected at a G7 meeting in June, where Western industrial leaders issued a final communique that declared, “We emphasize the need to green the global finance system … We support moving towards mandatory climate-related financial disclosures.” That means requiring commercial banks to reveal the risks to their balance sheets — and those of their clients — of both a changing climate and any rapid collapse of markets for fossil fuels as governments try to head off disaster by weaning off fossil fuels.
The world’s major central banks, which control the production and distribution of money on behalf of national governments, have traditionally sought to remain “market neutral” when carrying out their responsibilities. That means they avoid favoring one part of the economy over others. But now the biggest central banks appear to be concluding that carbon neutrality is more important than market neutrality.
Συνέχεια ανάγνωσης εδώ
Πηγή: e360.yale.edu
