Central Bank Perspective: Promoting Green Finance for Sustainable Economic Development
The Urgency of Green Policy for Central Banks
Achieving climate target is not a mandate for central bank. However, as climate related risks become more apparent and if it potentially hampers the
achievement of monetary and financial system stability, central bank needs to take a action in managing the risks.
Climate-related Risk
Potential Impacts on Monetary
and Financial Stability
Central Bank Roles
Physical Risk
Including acute hazards
(extreme weather events, heat
waves, flood) and chronic
hazards (rising sea levels,
depleting biodiversity, etc)
Transitional Risk
Risk resulting from changing
regulation, technology and
preferences in attempt to adjust
into low carbon economy
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Monetary Impact
Increasing price volatility due to
deteriorating agriculture productivity
Exchange rate pressure due to changing
investor preference and global financial flow
Adjustment in monetary policy transmission
due to changing valuation of risks
Financial Stability Impact
Higher credit risk on sectors vulnerable to
physical risk
Increasing financial risks from stranded
assets and revaluation of market instruments
• Limited access to finance for carbon-
intensive industry
Ensuring financial sector
resiliency toward climate change
impacts
Supporting just, orderly, and
affordable transition through
encouraging sustainable finance
and strengthening supporting
infrastructure (e.g. data
availability & disclosure,
awareness, etc)
Coordination and synergy with
other authorities (domestic and
international) in managing
climate-related financial risk and
harmonizing transition in
financial sectorView entire presentation