Central banks deepen their climate efforts
Climate change is rising higher on the radar for central banks on both sides of the Atlantic.
Driving the news: The Federal Reserve formed a panel aimed at boosting the central bank's understanding of climate's implications for "financial institutions, infrastructure, and markets," officials said Monday.
- Meanwhile, the European Central Bank (ECB) is creating a new team to bring together climate work happening in different parts of the organization.
- The new 10-person unit "reflects the growing importance of climate change for the economy and the ECB’s policy," Monday's announcement states.
Why it matters: The moves show how central bankers are increasingly trying to grapple with the ways that climate change can pose dangers to financial stability.
- The Fed said its new Supervision Climate Committee (SCC) "will build on our climate change work already underway ... and help us take a careful, thoughtful, and transparent approach to analyzing these potential risks.”
- And Reuters reports that top ECB policymakers said yesterday that the bank "should consider climate risk when buying assets or accepting them as collateral."
The SCC will be led by Kevin Stiroh, who comes to the position from his role as head of the supervision group at the New York Fed and has deepened his climate focus in recent years.
Catch up quick: In December the Fed joined the Network of Central Banks and Supervisors for Greening the Financial System.
- It's a 3-year-old network of central banks working to manage climate-related risks and help mobilize low-carbon investments.
- And in November, for the first time, the Fed included climate among the risks described in its formal Financial Stability Report.