The Network of Central Banks and Supervisors for Greening the Financial System (NGFS), has said that Climate change poses significant challenges for the global economy and financial system.
The Network said such challenges also have implications for the structure of economic activity, the safety and soundness of financial institutions and the stability of the financial sector more broadly.
This is contained in a statement issued yesterday by the Federal Reserve Board (FRB), the United States Central Bank, in support of the Glasgow Declaration NGFS.
But the Network believes that “A sustained global response by national authorities, the international community, and the private sector can address the financial and economic implications of climate change.”
According to the statement, the efforts highlighted by COP26 are an important part of that global response. “The 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 sustained global response by national authorities, the international community, and the private sector can address the financial and economic implications of climate change.
A critical part of the NGFS work programme 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 programme in the future.
The Federal Reserve therefore promised to “address climate-related risks in an analytically rigorous, transparent, and collaborative way through our domestic work with other federal agencies.”
The agencies include 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 Board also expressed its commitment to understanding and addressing all factors that could impact its ability to meet responsibilities, including those related to climate change.
