The Federal Reserve is likely to join a group of global peers that was set up to combat climate change and improve understanding of the threat it poses to economies, Chairman Jerome Powell said.
Fed officials have already attended meetings of the Network for Greening the Financial System, which brings together about 50 central banks and other institutions, Powell said at a press conference in Washington on Wednesday. Asked why it hadn’t officially signed on as a member, he replied that the Fed “probably will do that at some point.”
“Is there a system-wide financial stability risk? Over the longer term, it’s certainly possible and I would say that feeds into the way we’re thinking about climate change as an institution,” Powell said. But he added that politicians should take most of the responsibility for changes that need to be made.
The Fed has generally taken a back seat on climate change, although pressure from critics is ramping up -- especially as other central banks start to act. The Bank of England plans to stress-test insurers and banks for their ability to cope with the fallout from global warming, and the Bank of Canada has started a multi-year research program.
The U.S. central bank is in the early stages of research on climate impact, and held its first-ever conference on the topic in November.
“The public has every right to expect, and will expect, that we will assure that the financial system is resilient and robust against the risks of climate change,” Powell said.
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