Climate Change Could Blow Up the Economy. Banks Aren’t Ready.
Like other central banks, the E.C.B., which met on Thursday, is scrambling to prepare for what a report warns could be a coming economic upheaval.
FRANKFURT — Climate change has already been blamed for deadly bush fires in Australia, withering coral reefs, rising sea levels and ever more cataclysmic storms. Could it also cause the next financial crisis?
A report issued this week by an umbrella organization for the world’s central banks argued that the answer is yes, while warning that central bankers lack tools to deal with what it says could be one of the biggest economic dislocations of all time.
The book-length report, published by the Bank for International Settlements, in Basel, Switzerland, signals what could be the overriding theme for central banks in the decade to come.
“Climate change poses unprecedented challenges to human societies, and our community of central banks and supervisors cannot consider itself immune to the risks ahead of us,” François Villeroy de Galhau, governor of the Banque de France, said in the report.