Macro Focus - March 2019 (2)
What central banks can do to fight climate change

  • Climate change poses risks to financial stability and is thus within central banks’ mandates 
  • The Bank of England is in the lead; the Federal Reserve is farthest behind 
  • Central banks should step up research, improve disclosure and assess their own balance sheets to mitigate climate-related risks 
The economy is changing all the time in response to a large number of forces. Monetary policy is always having to analyse and assess these forces and their impact on the economy. But few of these forces have the scale, persistence and systemic risk of climate change.” Guy Debelle, Deputy Governor, Reserve Bank of Australia, March 12, 2019.

The costs of inaction on climate change are rising. The stakes are high, including risks to financial stability. Central banks are increasingly engaging in the debate. Their mandates, interpretations, and sense of urgency vary. In this analysis, we review how far central banks have come and what to expect in the coming years. Our conclusion is that central banks both should and will step up research and regulations to combat climate change. Both action and inaction will influence financial systems significantly.

PDF-Document Macro Focus: What central banks can do to fight climate change


Lija Strašuna, Chief Economist (Latvia)

Anna Breman, PhD, Group Chief Economist, Global Head of Macro Research, +46 703 149587

Assisted by Alexandra Igel and Marianna Rõbinskaja

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