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The Federal Reserve Building. Photo by Liu Jie/Xinhua via Getty

The Federal Reserve said Tuesday that it has joined a three-year-old network of central banks working to manage climate-related risks to the financial system and help mobilize low-carbon investments.

Why it matters: The Fed board's unanimous vote to join the Network of Central Banks and Supervisors for Greening the Financial System shows how the Fed has increasingly been devoting attention to the topic.

The big picture: "As we develop our understanding of how best to assess the impact of climate change on the financial system, we look forward to continuing and deepening our discussions with our NGFS colleagues from around the world," Fed chairman Jerome Powell said in a statement.

Catch up fast: Reuters points out that the Fed had been the "only major global central bank" other than India's not to join.

  • But the Fed had already been working with the coalition on an informal basis, and it's the latest step in a growing push by the Fed and its branches to become more active in the topic.
  • Those efforts included a climate conference hosted last year by the Federal Reserve Bank of San Francisco.
  • Powell, in a letter to lawmakers last year, noted severe weather can not only "devastate" local economies, including banks, but also "temporarily affect national economic output and employment."
  • Last month, for the first time, the Fed included climate among the risks described in its formal Financial Stability Report.

What we're watching: How much the Fed may deepen its involvement on climate in other ways, especially as incoming President Joe Biden makes nominations to the board.

  • There's already pressure from Democrats and environmentalists for a more aggressive posture.
  • Democratic Sen. Brian Schatz of Hawaii said in a statement that the Fed should follow up its decision to join with "concrete steps" on managing climate risks.
  • "That includes setting clear supervisory expectations for how banks should manage their climate risk exposure, and using tools like stress testing to hold them accountable," said Schatz, a member of the Senate Banking Committee.

Go deeper

Dion Rabouin, author of Markets
Jan 20, 2021 - Economy & Business

Janet Yellen said all the right things to reassure the markets

Illustration: Aïda Amer/Axios

Treasury Secretary nominee and former Fed chair Janet Yellen's confirmation hearing before the Senate Finance Committee on Tuesday showed markets just what they can expect from the administration of President-elect Joe Biden: more of what they got under President Trump — at least for now.

What it means: Investors and big companies reaped the benefits of ultralow U.S. interest rates and low taxes for most of Trump's term as well as significant increases in government spending, even before the coronavirus pandemic.

Janet Yellen plays down debt, tax hike concerns in confirmation hearing

Treasury Secretary nominee Janet Yellen at an event in December. Photo: Alex Wong via Getty Images

Janet Yellen, Biden's pick to lead the Treasury Department, pushed back against two key concerns from Republican senators at her confirmation hearing on Tuesday: the country's debt and the incoming administration's plans to eventually raise taxes.

Driving the news: Yellen — who's expected to win confirmation — said spending big now will prevent the U.S. from having to dig out of a deeper hole later. She also said the Biden administration's priority right now is coronavirus relief, not raising taxes.

Ben Geman, author of Generate
23 hours ago - Energy & Environment

Voters favor Biden's climate policies, but few view issue as top priority

Data: Morning Consult; Chart: Axios Visuals

Several new polls help to show where the public's at on energy and climate as Biden takes office.

Why it matters: People tend to favor emissions-cutting and low-carbon energy initiatives, but it's hardly top of mind.

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