(LiveMint)
The climate change risk to financial stability is rising and there is a need for an appropriate policy framework to identify, assess and manage this risk, according to Reserve bank of India. In it’s financial stability report, RBI said that some central banks have started to prepare to monitor and manage climate risks.
The Bank of England for instance has announced plans to undertake Biennial Scenario analysis in order to test the resilience of the financial system to the physical and transition risks associated with different climate pathways. Banque de France has also started taking into account the high-level scenarios given by the Central Banks and Supervisors Network for Greening the Financial System (NGFS). Launched at the Paris One Planet Summit on December 2017, the NGFS is a group of central banks and supervisors willing to share best practices and contribute to the development of environment and climate risk management in the financial sector, while mobilising mainstream finance to support the transition towards a sustainable economy. RBI joined NGFS as a member central bank in April 2021.
