At this year’s gathering of central bank regulators and economists in Jackson Hole, Wyoming, there was very little discussion of climate change, which some critics found “shocking”.
The annual summit brings together policymakers and economists from around the world to discuss current economic topics and solutions. This year’s theme – structural shifts in the global economy – included many discussions around inflation, monetary policy and debt.
But other than a passing mention by European Central Bank president Christine Lagarde, climate change was not on the table. Even Fed president Jerome Powell did not mention climate change in his keynote address.
The fact that climate change was not on the agenda despite being a key driver in the risk to global financial stability was “shocking,” said David Arkush, climate program director at advocacy group Public Citizen. Officials and economists should be considering solutions “rather than stand by as the next global financial crisis develops,” he said.
“And the officials should adopt assertive policies that shepherd the economy and financial system swiftly and safely through the tumultuous climate-related transitions that are already underway,” he said.
Before the summit, a group of international advocates sent an open letter to participants, asking them to act quickly by adopting a precautionary approach to risk mitigation, requiring capital buffers that take climate risk into account, and including forward-looking tools such as transition plans in their policies.
Lagarde was the only speaker to mention the risks of climate change as one of the unprecedented shocks facing the global economy, especially regarding energy and the transition to the green economy.
“We are already witnessing the effects of accelerating climate change, and this will likely translate into more frequent supply shocks in the future,” she said.
The move to renewable energy will likely increase energy supply shocks and require a lot of investment in a short time period, which “will make the economic outlook harder to read” and could cause price shocks, she said on Friday.
Central banks need to make sure they have clarity and flexibility in the ongoing transition, she added, as “faced with a changing world, monetary policy should not itself become a source of uncertainty”.
This page was last updated August 29, 2023
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