Tag: Climate risk

Shifting Gears: Integrating Climate Risks in Monetary Policy Operations

 | 20 January 2020
Monetary, Policy Briefs | Tags: Asset Purchases, Central Banks, Climate risk, Collateral framework, Credit Risk
The assets central banks purchase and accept as collateral are at the core of monetary policy implementation. Risk considerations play a crucial role in the selection of these assets: central banks seek to limit their holdings and eligible collateral to assets that minimize their risk ... continue reading

Climate Risk and Financial Systems of Latin America: Regulatory, Supervisory and Industry Practices in the Region and Beyond

 , , , and | 18 December 2019
Discussion Notes, Monetary | Tags: Central Banks, Climate risk, Financial Regulation, Green Finance, Latin America
In Latin America and the Caribbean (LAC), regional supervisors and regulators have not yet explicitly included nor addressed climate-related risks in binding regulations and/or supervisory measures for the financial sector. This implies significant work ahead for the LAC financial sector to develop effective and complete ... continue reading

Climate Risks in Financial Assets

 , and | 4 November 2019
Discussion Notes, Monetary | Tags: Asset prices, Climate risk, Climate stress tests
This note reviews the empirical evidence available in the academic literature about the impact of climate-related risks on financial assets. It addresses three main questions: does climate change already affect financial asset returns? What is the potential impact of future climate-related costs on financial asset ... continue reading

Integrating Climate Risks into Credit Risk Assessment: Current Methodologies and the Case of Central Banks Corporate Bond Purchases

 | 21 December 2018
Discussion Notes, Monetary | Tags: Climate risk, Credit Risk, ECB Corporate Sector Purchase Programme
Climate change, and the transition to a low-carbon economy that can mitigate it, engender significant economic costs. These costs are ultimately borne by households and firms. They affect households’ and firms’ cash flows and wealth, which are key determinants of their credit worthiness. Climate-related costs ... continue reading

Central Banks Should Reflect Climate Risks in Monetary Policy Operations

 | 10 September 2018
Monetary, Policy Briefs | Tags: Asset Purchases, Central Banks, Climate risk, Collateral framework
The transition to a low-carbon economy requires a shift in capital allocation from incumbent carbon-intensive technologies to new low-carbon technologies. Financial markets play a key role in this process: they influence firms’ investment costs and serve as reference point in investors’ decisions. Currently, there ... continue reading