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“Green Swans”: central banks in the age of climate-related risks
[Le « Cygne Vert » : les banques centrales à l’ère des risques climatiques]

Author

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  • Patrick Bolton Patrick
  • Després Morgan
  • Pereira da Silva Luiz Awazu
  • Samama Frédéric
  • Svartzman Romain

Abstract

Risks associated with climate change are beginning to affect central banks’ financial stability mandate. Recognition of extreme physical and transition risks, known as “Green Swans”, is particularly difficult in the field of financial stability supervision due to the radical uncertainty, non-linearity and cascade effects associated with such risks. Central banks can help prevent these risks and mitigate their consequences, including by developing scenario analyses, but these initiatives will not be sufficient on their own. Climate change, like the current COVID-19 crisis, requires unprecedented collective action and coordination efforts among various actors. The article explores how central banks can promote such coordination, within their mandate, in order to reduce these new ecological and health risks. Le mandat de stabilité financière des banques centrales commence à être affecté par les risques liés au changement climatique. La prise en compte des risques extrêmes (physiques et de transition), qualifiés de « Cygnes Verts », dans la supervision de la stabilité financière est rendue particulièrement difficile par l’incertitude radicale, la non-linéarité et les effets de cascade qui leur sont associés. Les banques centrales peuvent contribuer à prévenir ces risques et à en atténuer les conséquences, notamment en développant des analyses de scénarios, mais celles ci ne suffiront pas. Le changement climatique nécessite une action collective et des efforts de coordination sans précédent entre divers acteurs, comme l’exige actuellement la crise du Covid-19. L’article explore ainsi comment les banques centrales peuvent favoriser une telle coordination, et ce dans le cadre de leur mandat, en vue de réduire ces nouveaux risques écologiques et sanitaires.

Suggested Citation

  • Patrick Bolton Patrick & Després Morgan & Pereira da Silva Luiz Awazu & Samama Frédéric & Svartzman Romain, 2020. "“Green Swans”: central banks in the age of climate-related risks [Le « Cygne Vert » : les banques centrales à l’ère des risques climatiques]," Bulletin de la Banque de France, Banque de France, issue 229.
  • Handle: RePEc:bfr:bullbf:2020:229:08
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    References listed on IDEAS

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    Cited by:

    1. Oustry Antoine & Erkan Bunyamin & Svartzman Romain & Weber Pierre-François, 2020. "Climate-related Risks and Central Banks’ Collateral Policy: a Methodological Experiment," Working papers 790, Banque de France.
    2. Salez Paul & Jeudy Bruno-Philippe, 2020. "Lessons from the 90th Anniversary of the Bank for International Settlements. How to remain central in a changing environment [Leçons pour les 90 ans de la Banque des règlements internationaux. Comm," Bulletin de la Banque de France, Banque de France, issue 232.
    3. Chia‐Chi Lee & Shih‐Yun Kuo & Huang‐Hsiung Hsu & Tung‐Li Mo & En‐Yu Chang & Kuan‐Chun Huang, 2023. "How does the research community contribute to corporate climate‐related risk disclosures? The gap between ideals and reality," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(2), pages 927-940, March.
    4. Donato Masciandaro & Romano Vincenzo Tarsia, 2021. "Society, Politicians, Climate Change and Central Banks: An Index of Green Activism," BAFFI CAREFIN Working Papers 21167, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    5. Donato Masciandaro & Romano Vincenzo Tarsia, 2021. "Society, Politicians, Climate Change and Central Banks: An Index of Green Activism," BAFFI CAREFIN Working Papers 21167, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

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    More about this item

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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