Research

Prudential transition plans could offer a technical solution to address some of the challenges of integrating transition risks into the prudential framework, say climate finance experts.

Climate litigation is “growing rapidly” and central banks should monitor associated financial risks, says the Network for the Greening of the Financial System.

About 60% of managed assets in the EU are in ESG or sustainability linked funds, but this MSCI report says there is a long way to go to integrate sustainability into investment processes.

In this white paper, digital finance experts explore how central banks could design a nature-based digital currency that supports economic stability, human wellbeing and planetary health.

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.

Climate change creates substantial sovereign credit risks which should be reflected in banks’ capital provisions and central banks’ prudential policy and risk management.

Researchers show that climate-induced sovereign downgrades will occur by 2030, and how climate-smart policies could curb the impact on debt-servicing costs.

According to this study, a supportive domestic environment enabled the European Central Bank to emerge as a leader in climate policy, while the Federal Reserve lags behind.

Macroprudential policy is a ‘natural’ starting point to address systemic climate risks, say economists, and systemic risk buffers and exposure limits are two promising options.

Multilateral development finance is unable to meet present economic and sustainability challenges, says this paper which outlines reforms for development banks to bridge financing gaps in the global south.

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.