Facilitating the Transition to Net Zero and Institutional Change at the Bank of England
The Bank of England’s new environmental remit has not catalysed the bold change to monetary policy needed to meet net-zero targets, say political economists in this paper.
Crisk: Measuring the Climate Risk Exposure of the Financial System
Economists have developed a market-based measure of the potential effect of transition risk on banks’ capitalisation which can be used to explore ‘severe but plausible’ climate scenarios.
Climate Risk Stress Tests Underestimate Potential Financial Sector Losses
Climate stress tests may significantly underestimate losses and should incorporate “severe but plausible” scenarios such as “green swan” and Minsky-type events, say researchers. …
A Common Path to Improve European Climate Risk Stress Testing and Scenarios Analysis
Survey results show banks are gaining valuable insights from climate risk stress tests, but improvements are needed to effectively manage those risks.
Feeling the Heat
Climate change is placing fiscal health under threat, say macroeconomic researchers, and policymakers must ramp up investment in climate change resilience to avoid adverse effects on financial stability.
Results of the 2022 Climate Risk Stress Test of the Eurosystem Balance Sheet
The European Central Bank’s 2022 stress test finds that the Eurosystem’s balance sheet is materially exposed to climate risks and that the corporate bond portfolio is the primary source of exposure.
Not Too Late
This NGFS paper compares current fossil energy price increases to an involuntary price on carbon, arguing that they offer a “narrow but unique opportunity” to accelerate the transition to net zero.
Economic Impacts of Climate Change
Based on input from 48 global banks and investors, this report introduces three new climate-driven macroeconomic shock scenarios, exploring their economic implications using a commonly used short-term global econometric model.
Acute Climate Risks in the Financial System
This paper finds that top-down climate risk approaches, such as those used by the NGFS, are of limited value at the granular scale relevant to the financial sector.
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