Can Central Banks Fight Climate Change?

IMF SEMINAR EVENT

DATE: October 16, 2019

DAY: Wednesday

2:00 PM - 3:00 PM

LOCATION: IMF HQ1 Atrium (HQ1-1-700)

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How can central banks adjust their frameworks to deal with the uncertainties associated with climate change and ensure a smooth transition to a green economy? Financial Times US Managing Editor Gillian Tett, provides key takeaways from the seminar.

Overview

Can central bankers prevent the financial stresses from climate change from boiling over? What proactive steps can they take to promote a greener world? As concerns continue to mount over the impact of climate change, central banks are taking action in a range of areas within their mandates.     

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Can Central Banks Fight Climate Change?

KEY POINTS

The financial stability risks associated with climate change are high—particularly for countries at the “front-lines”. Panelists discussed how central banks can adjust their regulatory and monetary policy frameworks to deal with the uncertainties associated with climate change and ensure an orderly transition to a green economy. 

Key Points:

  • Implications for central banks. Central banks are increasingly integrating climate-related risks into financial stability monitoring and micro-supervision. As Lane noted, the adjustment needed for the transition to low carbon sources will have a substantial impact on prices, and carbon-intensive industries, and needs to be managed to mitigate risks to the financial sector. Financial market participants are beginning to reprice climate-related risks, in light of regulations to reduce greenhouse emissions, but this can be a difficult in the absence of strong data. In this regard, panelists stressed that the data gap remains a big challenge for green finance.  
  • Climate policy and coordination. As Lane and Mauderer noted, central banks cannot substitute for an adequate climate policy; developing a coherent set of global standards is priority, requiring international cooperation on issues ranging from developing more harmonized disclosure standards to coordinating macroprudential and regulatory policies. Georgieva highlighted the role the IMF and other international institutions can play in these efforts, including by developing harmonized disclosure and classification standards for green assets, and stress-tests that can be integrated into IMF surveillance.   
  • Going green. Decarbonization will require large investments in renewable energy and adaption efforts. Panelists discussed how central banks can spur the development of green financing to help meet these demands, including by developing green bond and equity markets.  Georgieva suggested developing a taxonomy for "green” and spoke about the debate around central banks using more interventionist approaches to facilitate investment in “green” industries.  Akhtar highlighted the role “green quantitative easing” programs could play in reducing global warming, through the purchase of bonds funding energy-efficient/renewable projects. 

Panelists

Moderator: Gillian Tett

Gillian Tett serves as US Managing Editor for the Financial Times. She writes weekly columns for the newspaper, covering a range of economic, financial, political and social issues. In 2014, she was named Columnist of the Year in the British Press Awards and was the first recipient of the Royal Anthropological Institute Marsh Award. In June 2009 her book Fool's Gold won Financial Book of the Year at the inaugural Spear's Book Awards. Ms. Tett's past roles at the FT have included US Managing Editor (2010-2012), AssistantEditor, Capital Markets Editor, Deputy Editor of the Lex column, Tokyo Bureau Chief, and a reporter in Russia and Brussels.

Panelist: Kristalina Georgieva

Kristalina Georgieva is the Managing Director of the International Monetary Fund (IMF). She is the first person from an emerging market economy to lead the IMF since its inception in 1944. Before joining the Fund, Ms. Georgieva was Chief Executive Officer of the World Bank and also served as Interim President for a time. Previously, she served at the European Commission as Vice President for Budget and Human Resources – and as Commissioner for International Cooperation, Humanitarian Aid and Crisis Response. She was named “European of the Year” and “Commissioner of the Year” by European Voice for her leadership in the European Union’s humanitarian response to crises.

Panelist: Philip Lane


Philip Lane is the Chief Economist and Member of the Executive Board of the ECB as of June 2019. He previously served as the Governor of the Central Bank of Ireland from 2015 to 2019. Lane was the professor of international macroeconomics and Director of the Institute for International Integration Studies (IIIS) at Trinity College Dublin. He was a research fellow of the Centre for Economic Policy Research and had been a visiting scholar at the International Monetary Fund and the Federal Reserve Bank of New York and a consultant to the European Commission. He is among the "Top 5% of Economists in the World" according to IDEAS/RePEc. He studied at Trinity College Dublin and was elected a scholar in Economic and Social Studies there, before receiving a doctorate in Economics at Harvard University in 1995.

Panelist: Sabine Mauderer

Sabine Mauderer has been Member of the Executive Board of the Deutsche Bundesbank since September 2018. She is responsible for market operations. Furthermore, she is a member of the Steering Committee of the “Central banks and Supervisors Network for Greening the Financial System (NGFS)” and is heading one of the three work streams. Prior to her current responsibilities she held several senior positions at the KfW Banking group, e.g. Head of Banking Sector Restructuring. Before that she worked as a senior advisor at the Federal Ministry of Finance and the German Embassy in Washington D.C. Sabine Mauderer studied law in Germany and Spain, holds a PhD (Osnabrück University) and an Executive MBA (ESSEC Paris).

Panelist: Shamshad Akhtar

Shamshad Akhtar was an Under-Secretary-General of the United Nations and the tenth Executive Secretary of the Economic and Social Commission for Asia and the Pacific. Formerly. In her capacity, she led the UN-wide coordination of the work on the post-2015 development agenda. She was also the United Nations Sherpa for the G20, supporting the Finance Ministers and Central Bankers track. Akhtar has previously served as Governor of the Central Bank of Pakistan. She holds a PhD in Economics and a Masters in Development Economics from the UK, and an MSc in Economics from Quaid-e-Azam University, in Islamabad.