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Financial Regulation, Climate Change, and the Transition to a Low-Carbon Economy: A Survey of the Issues

Author

Listed:
  • Mr. Dimitri G Demekas
  • Pierpaolo Grippa

Abstract

There are demands on central banks and financial regulators to take on new responsibilities for supporting the transition to a low-carbon economy. Regulators can indeed facilitate the reorientation of financial flows necessary for the transition. But their powers should not be overestimated. Their diagnostic and policy toolkits are still in their infancy. They cannot (and should not) expand their mandate unilaterally. Taking on these new responsibilities can also have potential pitfalls and unintended consequences. Ultimately, financial regulators cannot deliver a low-carbon economy by themselves and should not risk being caught again in the role of ‘the only game in town.’

Suggested Citation

  • Mr. Dimitri G Demekas & Pierpaolo Grippa, 2021. "Financial Regulation, Climate Change, and the Transition to a Low-Carbon Economy: A Survey of the Issues," IMF Working Papers 2021/296, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2021/296
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    Citations

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    Cited by:

    1. Odongo, Maureen & Misati, Roseline Nyakerario & Kageha, Caren & Wamalwa, Peter Simiyu, 2023. "Sustainable financing, climate change risks and bank stability in Kenya," KBA Centre for Research on Financial Markets and Policy Working Paper Series 71, Kenya Bankers Association (KBA).
    2. Lingke Wu & Dehong Liu & Tiantian Lin, 2023. "The Impact of Climate Change on Financial Stability," Sustainability, MDPI, vol. 15(15), pages 1-18, July.
    3. Cen, Yu & Yin, Jinpeng, 2024. "Navigating climate challenges: Focusing on the effectiveness of natural resource rents, fintech, green finance, environmental quality, and digitalisation," Resources Policy, Elsevier, vol. 95(C).
    4. Maria Alessia Aiello, 2024. "Climate supervisory shocks and bank lending: empirical evidence from microdata," Temi di discussione (Economic working papers) 1465, Bank of Italy, Economic Research and International Relations Area.
    5. Berg, Tobias & Carletti, Elena & Claessens, Stijn & Krahnen, Jan Pieter & Monasterolo, Irene & Pagano, Marco, 2023. "Climate regulation and financial risk: The challenge of policy uncertainty," SAFE Policy Letters 100, Leibniz Institute for Financial Research SAFE.

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