U.S. financial regulators warn climate change threatens financial stability

2021-10-22 15:35:45Xinhua Editor : Li Yan ECNS App Download

U.S. financial regulators warned on Thursday that climate change poses an emerging and increasing threat to U.S. financial stability, laying out necessary actions to identify and address climate-related financial risks.

"The Council views climate-related financial risks as an emerging threat to the financial stability of the United States," said the Financial Stability Oversight Council (FSOC), which is led by the U.S. treasury secretary and includes leaders from major financial regulatory agencies.

"By working together, Council members can accelerate their understanding of climate-related financial risks and take necessary steps to ensure the resilience of the financial system to such risks," it said in a report.

U.S. Treasury Secretary Janet Yellen said that the report and recommendations represent "an important first step" towards making U.S. financial system more resilient to the threat of climate change.

"These measures will support the Administration's urgent, whole-of-government effort on climate change and help the financial system support an orderly, economy-wide transition toward the goal of net-zero emissions," Yellen said in a statement.

U.S. Federal Reserve Chair Jerome Powell said in a separate statement that the U.S. central bank will address climate-related risks in an "analytically rigorous, transparent, and collaborative" way.

"With the creation of the Supervision Climate Committee and the Financial Stability Climate Committee, we are working to better understand and address climate-related risks for financial institutions and the broader financial system," Powell said, adding the Fed will continue to identify links between climate change and financial stability.

"We at the Fed are developing a program of scenario analysis to evaluate the potential economic and financial risks posed by different climate outcomes," he said.

Following the 2008 financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act established the FSOC to identify and respond to emerging threats to U.S. financial stability.


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