Climate change poses significant challenges for the global economy, financial system—CBs

The Network of Central Banks and Supervisors for Greening the Financial System (NGFS) has said Climate change poses significant challenges for the global economy and financial system, with implications for the structure of economic activity, the safety and soundness of financial institutions and the stability of the financial sector more broadly. A sustained global response by national authorities, the international community, and the private sector can address the financial and economic implications of climate change.

It said that “the efforts highlighted by COP26 are an important part of that global response. The US Federal Reserve supports the efforts of the NGFS to identify key issues and potential solutions for the climate-related challenges most relevant to central banks and supervisory authorities. While the primary responsibility for addressing climate change itself rests with elected officials, the Federal Reserve is committed to working within our existing mandates and authorities to address the implications of climate change, particularly the regulation and supervision of financial institutions and the stability of the broader financial system. A critical part of the NGFS work program has been to develop a range of potential solutions that each member can consider adopting relative to their particular mandates, scope of responsibilities, and financial market structure. This approach has served the NGFS well, and we look forward to supporting the NGFS work program in the future.

“The Federal Reserve will address climate-related risks in an analytically rigorous, transparent, and collaborative way through our domestic work with other federal agencies including the Financial Stability Oversight Council; our international engagement through the Financial Stability Board, the Basel Committee on Banking Supervision, and the NGFS; and through our broad and transparent engagement with the private sector. The Federal Reserve is committed to understanding and addressing all factors that could impact our ability to meet our responsibilities, including those related to climate change. We appreciate the magnitude of the challenges ahead of us, and the Federal Reserve is committed to do our part”.