Climate change a key influence on monetary policy, says BoJ’s Haruhiko Kuroda

March 6, 2021|Written by Jamie Woolley|Bank of Japan

The Governor of the Bank of Japan (BoJ), Haruhiko Kuroda, said that climate change is one of the key themes guiding monetary policy.

Haruhiko Kuroda made the statement to the Japanese parliament’s Financial Affairs Committee on Friday, saying that “climate change is among crucial factors affecting the economy and financial system”. However, he made it clear that the bank’s climate ambitions do not extend to greening its corporate bond-buying programme.

In remarks largely focused on climate risk to financial stability, Kuroda called for more research and for deeper debate with other central banks. He went on to say that the BoJ must speed up research on the effects of climate change on monetary policy and the risks it poses to financial institutions, but any action must take place in context of the central bank’s mandate. 

Kuroda added that, while it is currently possible for the BoJ to buy green bonds that meet existing criteria, there are many issues involved in targeting green bonds, including the bank’s principle of market neutrality.

As part of its research agenda, the BoJ will host a global workshop to examine how climate change risks might affect the banking system. Although the bank has been a member of the Network for Greening the Financial System since 2019, it has concentrated almost exclusively on understanding climate risk and has so far shown little sign of moving beyond research to align its operations with the targets of the Paris agreement.

This page was last updated April 23, 2021

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