Sustainable Finance Policy-Making: Why and How 16

Why should central banks and financial supervisors worry about climate change and decarbonisation? And how are they supposed to act upon them? These questions have been asked many times in recent years, but have yet to receive a definitive answer. The main institutional answer given so far - at leas...

Full description

Saved in:
Bibliographic Details
Published inEuropean economy (Roma) no. 2; pp. 59 - 74
Main Authors Campiglio, Emanuele, Lamperti, Francesco
Format Journal Article
LanguageEnglish
Published Rome Europeye srl 01.01.2021
Subjects
Carbon
Central banks
Climate action
Climate change
Economic crisis
Financial institutions
Global economy
International finance
Materiality
Monetary policy
Paris Agreement
Supervisors
Online AccessGet full text

Cover

More Information
Summary:Why should central banks and financial supervisors worry about climate change and decarbonisation? And how are they supposed to act upon them? These questions have been asked many times in recent years, but have yet to receive a definitive answer. The main institutional answer given so far - at least in Europe and similar jurisdictions - has been based on the possibility that climate change or the low-carbon transition might affect the ability of central banks and supervisors to achieve their mandated primary objectives, such as price and financial stability (Schnabel, 2021; Semieniuk et al., 2021). If these climate-related risks were found to be material, stronger policy action would be justified. But how are we supposed to find proof of the materiality of climate-related risks? At the moment, deep knowledge gaps remain in all the necessary ingredients: i) abundant and granular data; ii) methods to analyse and understand empirical evidence; and iii) reliable modelling methods to explore future scenarios.
ISSN:2421-6917
2421-6917