Climate Risks in Albania and their Relevance to the Central Bank

This policy brief was published by SUERF, the European Money and Finance Forum, here.

Climate change already has a growing impact on businesses and households in Albania. In the next decades, it will impact all economic sectors and all regions in one form or another and is very likely to have irreversible consequences. To mitigate these impacts, profound changes in the Albanian economy are necessary, involving significant investments in transition and mitigation activities and infrastructures. These investments present both risks and opportunities for the Albanian economy and can only be unlocked by the coordination of public and private financial institutions, including the Bank of Albania (BoA). The BoA can play a role part both as financial supervisor and as monetary policymaker. First, the BoA must ensure the financial system’s resilience to climate shocks. It can also contribute to creating adequate financial market structures and conditions for Albanian financial institutions to fund the opportunities of the transition to a net-zero economy. Second, the BoA must assess and manage its own exposure to climate risks, resulting from the assets it owns from monetary policy operations. This policy brief outlines a possible roadmap for the BoA to address all these challenges.

Read the full policy brief Climate Risks in Albania and their Relevance to the Central Bank.