On a challenge as large as climate change, there are financial risks associated with making the shift to a low-carbon economy, and there are risks tied to inaction. Central banks thus have no choice but to focus more closely on the issue, with or without an expansion of their traditional policy mandates.
NEW YORK – Central banks confronted with the issue of climate change face a number of questions. Should monetary policymakers (and other financial regulators and supervisors) focus on the implications of climate change for financial stability? Should they treat climate change as a potential threat to their ability to pursue their macroeconomic mandates of full employment and/or price stability? Should mitigating the adverse consequences of climate change become an explicit monetary-policy objective?
NEW YORK – Central banks confronted with the issue of climate change face a number of questions. Should monetary policymakers (and other financial regulators and supervisors) focus on the implications of climate change for financial stability? Should they treat climate change as a potential threat to their ability to pursue their macroeconomic mandates of full employment and/or price stability? Should mitigating the adverse consequences of climate change become an explicit monetary-policy objective?