Macro Implications of Climate Risks

Ramu Thiagarajan, Richard F. Lacaille, Simona Mocuta, Hanbin Im

2022 | Practitioner | Climate

Although important, the authors believe that the role of central banks is likely to be somewhat limited in the battle against climate change; the pathways to effect change through central bank policy are indirect and dependent on transmission through other channels that weaken efficacy. Nevertheless, the authors conclude that incorporating appropriate climate risk tests into the regulatory framework fall within the central banks’ mandate of ensuring financial stability.