SAFE- CEPR EFA RPN: The Macroprudential Challenge of Climate Change
Past years have seen the development of analytical foundations for measuring climate-related financial risk by linking climate vulnerability to standard financial risk measurement. The latest ECB/ESRB report on climate change raises the understanding of the interdependencies and spillovers to gauge implications for systemic risk. In addition, the work focussed on a forward-looking dynamic view of the modelling of financial stability risks stemming from climate change, noting that the past is unlikely to be a good guide. To contain future systemic risks from climate change to the financial system, macroprudential policy may have an important role to play. The report discusses the options for delivering a coordinated European macroprudential response, and considers a range of possible instruments that could be used in this respect.
