ECB official warns climate crisis poses growing threat to ‘core financial stability’
📰 source: theguardian_business · 📚 research
european central bank executive board member frank elderson warns the climate and nature crisis is now a threat to 'core financial stability'. he says ecosystem services — natural processes that support economies — are in rapid decline, and that banks' exposure to their collapse is relevant. the ecb is stepping up monitoring and plans to publish analysis later this year on how ecosystem degradation could translate into credit losses for eurozone banks.
elderson points to the wildfires raging across france and spain with record heat as concrete examples of the disruption. he argues nature-related risks can feed into credit risk, growth, inflation, and long-term financial instability. the ecb launched a work programme to assess how damage to ecosystem services could expose the financial system.
elderson helped found the network for greening the financial system in 2017. the us under trump pulled out of that group last year, leaving europe to lead on climate risk. but elderson says european banks still think the issue is relevant — 'that time has passed.'
why it matters: ecb official ties nature breakdown to credit risk and inflation, signalling regulators may force banks to price in climate losses.
source: theguardian_business
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