Network for Greening the Financial System (NGFS) reposted this
Pre-Inauguration Day news: the US Federal Reserve Board officially announced yesterday its decision to withdraw from the Network for Greening the Financial System (NGFS). Its press release is here: https://lnkd.in/dbSmeNiQ. The NGFS responded with its own press release: https://lnkd.in/dFehUr36 This is altogether not surprising, considering the Federal Reserve only joined the NGFS in 2020. However, the contrast between the two press releases is striking and deserves to be highlighted. The Fed implies that the NGFS's broad scope increasingly tested the boundaries of the Fed's mandate (which includes financial stability, although there is some debate/ambiguity regarding the scope and nature of this mandate). The NGFS's response is strong: it notes that "extreme climate events and natural disasters are among the few visible and painful certainties of our times", and announces it will be releasing its first ever vintage of short-term scenarios in 2025. In other words: the time horizon within which physical impacts of climate manifest themselves is shortening, and the risk that climate change will test the stability of our financial system is also increasing - so it is growing more and more relevant to central banks' financial stability mandates, not less. The news comes right off the heels of an important publication by the Financial Stability Board, providing an analytical toolkit to assess climate-related risks, noting their increased frequency, magnitude, and capacity to disrupt the financial system: https://lnkd.in/dTVeeSUt Jean Boissinot Morgan Després Véronique Ormezzano Kate Levick Elizabeth Jacobs Salvatore Serravalle Hilal Atici Pierre Monnin Julia Symon Maud ABDELLI
It’s a pity!
Nick Robins
2mo
Instructive to remember that NGFS was established in response to the first Trump administration which had made sustainable finance policy cooperation through the G20 impossible; the Fed then joined later and it has now left. The momentum behind central bank cooperation on climate and nature remains strong, including in key countries in the Global South.
Climate change poses macroeconomic risks that threaten inflation stability, employment, and financial system resilience—directly tied to the Fed's mandate. Ignoring these risks under the guise of misalignment with the NGFS dismisses their clear economic relevance and reinforces the pure political nature of the Fed and the absurdity of their reasoning and actions....
Independent Economics
2moRegrettable to see the Fed outside of what seemed a strong concerted agenda of most central banks. Terrible signal to the financial sector as GFANZ unravels. But aren’t NGFS agenda research, suggested tools and scenarios already quite well advanced so that their absence will make little difference? How soon will the crisis is residential insurance impact US mortgage markets and hence the core Fed mandate?