Central banks need to fight climate change but all policy options on the table come with costly drawbacks, so action needs to be gradual and cautious, an umbrella group of the world's top central banks and supervisors said on Wednesday.
With climate change posing a growing risk to financial stability, central banks are examining their own role in driving a transformation and policymakers are weighing a range of options involving lending, asset purchases and collateral rules.But all potential changes either hinder monetary policy effectiveness, increase risk or run into operational feasibility, said the Network for Greening the Financial System, a group whose 89 members include the U.S.
"The least challenging options to operationalise are the least sophisticated ones in terms of addressing climate related risks," the group said.
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