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Photo: Kirsty Wigglesworth/WPA Pool via Getty Images

With just a month left before he steps down as head of the Bank of England (BoE), Mark Carney is putting the finishing touches on his legacy at the British central bank.

Driving the news: The BoE laid out how it planned to test the resilience of the U.K.'s largest banks and insurers in increasingly threatening environmental scenarios. It’s a notable step for Carney who's "played a key role in highlighting financial risks from global warming," as Bloomberg notes.

  • The "climate stress tests" will be in addition to the typical stress tests banks face, which examine whether they can withstand severe shocks to the global economy.

Why it matters: Central banks across the globe are paying more attention to the risks of climate change to financial institutions and the economy.

  • Carney, who's replacing former New York Mayor Michael Bloomberg as UN special envoy for climate action and finance, has been one of the most outspoken central bankers on the topic of climate change. His time at the helm of the BoE will be remembered for that, just as much as it will be for monetary policy.
  • What he's saying: "Climate change will affect the value of virtually every financial asset; the [test] will help ensure the core of our financial system is resilient to those changes," Carney said in a press release.

Yes, but: Banks can't pass or fail the test — and there are no guaranteed consequences if the central bank deems institutions' plans inadequate.

  • Results will be "published in aggregate without naming individual institutions," though the "BoE is not ruling out naming and shaming individual companies in the future if it feels not enough action is being taken," according to the FT.

The big picture: The European Central Bank said last month it's considering a climate change component to its existing stress tests. Meantime, the central bank's new leader Christine Lagarde has vowed that the ECB will "step up" action on climate change.

  • The Federal Reserve held its first-ever climate conference this year, though chairman Jerome Powell has been skeptical about the role monetary policy has when it comes to climate change.
  • In a sign of growing interest, senators recently proposed legislation that would require the Fed to develop bank stress tests for climate risks, much like the BoE is doing.

The bottom line: Per Reuters, the BoE "will publish detailed scenarios for the test next April, which will be closely watched by central banks in other countries."

P.S. U.K. Prime Minister Boris Johnson and Chancellor Sajid Javid are reportedly close to choosing Carney's successor. (Bloomberg)

Go deeper: Global economic uncertainty eased by U.K. elections, China trade deal

Go deeper

Biden taps Brian Deese to lead National Economic Council

Brian Deese (L) in 2015 with special envoy for climate change Todd Stern (C) and Secretary of State John Kerry (R). Photo: Mandel Ngan/AFP via Getty Images

President-elect Joe Biden announced Thursday that he has selected Brian Deese, a former Obama climate aide and head of sustainable investing at BlackRock, to serve as director of the National Economic Council.

Why it matters: The influential position does not require Senate confirmation, but Deese's time working for BlackRock, the world's largest asset manager and an investor in fossil fuels, has made him a target of criticism from progressives.

Felix Salmon, author of Capital
33 mins ago - Economy & Business

The places regulation does not reach

Illustration: Aïda Amer/Axios

Financial regulation is not exactly simple anywhere in the world. But one country stands out for the sheer amount of complexity and confusion in its regulatory regime — the U.S.

Why it matters: Important companies fall through the cracks, largely unregulated, while others contend with a vast array of regulatory bodies, none of which are remotely predictable.

1 hour ago - Economy & Business

Boeing gets huge 737 Max order from Ryanair, boosting hope for quick rebound

Ryanair low cost airline Boeing 737-800 aircraft as seen over the runway. Photo by Nik Oiko/SOPA Images/LightRocket via Getty Images

Dublin-based Ryanair said it would add 75 more planes to an existing order for Boeing's 737 Max airplanes, a giant vote of confidence as Boeing seeks to revive sales of its best-selling plane after a 20-month safety ban following two fatal crashes.

The big picture: Ryanair's big order, on the heels of breakthrough vaccine news, is also a promising sign that the devastated airline industry might recover from the global pandemic sooner than expected.

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