Ferdinando Giugliano, who writes for Bloomberg, claims that central banks should be involved in monitoring the impact of climate change on financial stability, but that their scope of work should not extend too far into the responsibility of mitigating climate change. He describes such ideas as “dangerous”.
Giugliano comments on a meeting of central bankers held in Amsterdam in April 2018:
“Last week, central bank governors from the U.K., France and the Netherlands met in Amsterdam to discuss how to adapt regulation to the risks posed by climate change. Together with five other institutions (from China, Germany, Mexico, Singapore and Sweden), these central banks have formed the “Network for Greening the Financial System” (NGFS). This group has two objectives: sharing and identifying best practices in the supervision of climate-related risks, and enhancing the role of the financial sector in mobilizing “green” financing. ”
Giugliano comments on the problem of setting clear policy objectives, and “..where to draw the line when it comes to central banks nudging economic actors along:…”. Giugliano suggests that central bank risk overstepping their mandates and distorting competition in the economy.
He writes: “The last thing central bankers need now is to suggest they are seeking to influence policy that should rightly be the preserve of elected officials.”
Read the article here on Bloomberg Opinion: