(Bloomberg) -- The European Central Bank has considered adding climate-related risks to its stress-test scenarios, the institution's Vice President Luis de Guindos said.
“Central banks will have to pay more and more attention to these types of issues,” Guindos said at a BNP Paribas event in London. He cited financial-stability issues related to global warming including the transition to lower-carbon growth models and the physical risk emanating from increasing natural disasters. The implications for monetary policy will be an important feature of discussions in the coming quarters, he said.
Read More: Scared Central Banks Face Up to Threats From Climate Change
New ECB President Christine Lagarde has pledged to make climate change more of a focus for the central bank, and the topic is likely to come up in the institution's Financial Stability Review next week. While the ECB is a member of the Network for Greening the Financial System -- a group of central banks with the goal of promoting sustainable growth -- it hasn't gone as far as some of its counterparts in incorporating climate risks into its operations.
A stress test including the issue could bring it more in line with the Bank of England, which under Mark Carney's leadership has added global warming to its discussions on financial stability in particular. The BOE is preparing to conduct climate-related stress tests for banks in 2021.
--With assistance from Lucy Meakin.
To contact the reporter on this story: Jill Ward in London at jward98@bloomberg.net
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jana Randow, David Goodman
©2019 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
