Climate research informing global finance: Scenarios can serve as yardstick for central banks’ risk assessment
Stability is at the core of central banks’ objectives. To assess climate destabilization risks, major central banks and supervisors plan to utilise climate scenarios developed by a team of researchers led by the Potsdam Institute for Climate Impact Research. These scenarios will inform the climate stress tests that central banks like the Bank of England or the Banque de France are planning to apply to the financial institutions they regulate. The work was commissioned by the “Network of Central Banks and Supervisors for Greening the Financial System” (NGFS), a group of 66 central banks and supervisors around the globe which aims to develop climate risk management in the financial sector.
The first round of scenarios has now been published. A second one will follow around the turn of the year. The research is conducted by the Potsdam Institute, the International Institute for Applied Systems Analysis (IIASA), Climate Analytics, the University of Maryland, and ETH Zurich in close collaboration with the NGFS.
Read the full press release on PIK website
More information on the NGFS Scenario presentation and the guide can be found here
The NGFS First Comprehensive Report (2019) containing all six recommendations can be found here
