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Climate Change Fever: Can Deposit Insurers Stay Cool?

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  • Van Roosebeke, Bert
  • Defina, Ryan

Abstract

Whereas research regarding the impact of climate change on the global financial system is ever growing, the impact of climate change and risks related therewith on deposit insurance has remained largely undealt with in literature. As global financial standard-setters have set the treatment of climate risks high on the agenda , this Policy Brief represents the first attempt to identify five core challenges that climate change may pose to the activity of deposit insurers and their ability to deliver on key objectives. The paper also classifies the challenges as to their risk-nature as well as to their directness, urgency and the feasibility of deposit insurers’ to respond to them. Given the novel nature of these issues as well as the high uncertainty and long time horizon inherent to them, the discussion here is by no means meant to be exhaustive. It is also recognised that the scale and degree to which climate change affects deposit insurers may vary significantly. This may be so due to differences in mandates or geographical exposure to climate risks. Nevertheless, the breath and scope of climate change-related risks as well as financial standard-setters’ omnipresent activities in the field make this topic of strategic interest to the deposit insurance community. The links between these challenges and the IADI Core Principles underscores the strategic urgency of this contemporary policy issue.

Suggested Citation

  • Van Roosebeke, Bert & Defina, Ryan, 2021. "Climate Change Fever: Can Deposit Insurers Stay Cool?," MPRA Paper 110715, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:110715
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    References listed on IDEAS

    as
    1. International Association of Deposit Insurers, 2019. "Deposit Insurers' Role in Contingency Planning and System-wide Crisis Preparedness and Management," IADI Guidance Papers 19-05, International Association of Deposit Insurers.
    2. International Association of Deposit Insurers Regional Committee of North America, 2021. "Contingency Plan Testing in North America," IADI Research Papers 21-06, International Association of Deposit Insurers.
    3. Ryan Defina, 2021. "Impact of the COVID-19 Pandemic on Deposit Insurance," IADI Survey Briefs 1, International Association of Deposit Insurers.
    4. Van Roosebeke, Bert & Defina, Ryan, 2021. "Five Emerging Issues in Deposit Insurance," MPRA Paper 110713, University Library of Munich, Germany.
    5. International Association of Deposit Insurers, 2020. "Risk Management and Internal Control System of Deposit Insurers," IADI Guidance Papers 20-12, International Association of Deposit Insurers.
    6. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, November.
    7. Patrick Bolton & Morgan Despres & Luiz Awazu Pereira da Silva & Frédéric Samama & Romain Svartzman, 2020. "The green swan," BIS Books, Bank for International Settlements, number 31.
    8. Nicholas Stern, 2008. "The Economics of Climate Change," American Economic Review, American Economic Association, vol. 98(2), pages 1-37, May.
    9. Nahiomy Alvarez & Alessandro Cocco & Ketan B. Patel, 2020. "A new framework for assessing climate change risk in financial markets," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue 448, pages 1-8, November.
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    Cited by:

    1. Van Roosebeke, Bert & Defina, Ryan, 2023. "ESG and Deposit Insurance: Taking Stock and Looking Ahead," MPRA Paper 116239, University Library of Munich, Germany.
    2. Bert Van Roosebeke & Ryan Defina, 2023. "The Role of Climate in Deposit Insurers' Fund Management: More Than a Financial Risk Management Factor?," IADI Survey Briefs 5, International Association of Deposit Insurers.
    3. Bert Van Roosebeke & Ryan Defina, 2022. "Deposit Insurance in 2022: Global Trends and Key Emerging Issues," IADI Research Papers 22-02, International Association of Deposit Insurers.
    4. Bert Van Roosebeke & Ryan Defina, 2023. "Deposit Insurance in 2023: Global Trends and Key Issues," IADI Research Papers 23-02, International Association of Deposit Insurers.

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    More about this item

    Keywords

    deposit insurance; bank resolution; climate change;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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