Governing Finance for Sustainable Prosperity

The governance of finance must be ambitiously reorientated to take account of challenges such as climate change, according to this report from the Council on Economic Policies. This should involve reform to the mandates, toolboxes and institutional approaches of governing authorities, the paper adds.

The authors observe that the roles and powers of financial authorities have changed and expanded over time, with their frontline role in responding to the economic fallout from Covid-19 being the most recent example. This has underlined the urgent need for a review of their governance frameworks, the report states.

Although central banks and financial supervisors have taken some steps to engage with the issue of climate change, their analysis and actions remain largely shaped by a narrow interpretation of their goals, the paper contends. They continue to focus on price and financial stability, despite the fact that climate change will eventually destroy lives and entire economies, the authors argue.