- 19 October 2021
- MACROPRUDENTIAL BULLETIN - ARTICLE - No. 15The challenge of capturing climate risks in the banking regulatory framework: is there a need for a macroprudential response?Details
- This article analysis the challenges of incorporating climate risks and their unique features in the existing prudential framework and explores potential avenues for addressing gaps identified in the banking framework.
- JEL Code
- Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
- 17 May 2021
- FINANCIAL STABILITY REVIEW - ARTICLEFinancial Stability Review Issue 1, 2021Details
- The ECB has been intensifying its quantitative work aimed at capturing climate-related risks to financial stability. This includes estimating financial system exposures to climate-related risks, upgrading banking sector scenario analysis and monitoring developments in the financing of the green transition. Considerable progress has been made on capturing banking sector exposures to firms that are subject to physical risks from climate change. While data and methodological challenges are still a focus of ongoing debates, our analyses suggest (i) somewhat concentrated bank exposures to physical and transition risk drivers, (ii) a prevalence of exposures amongst more vulnerable banks and in specific regions, (iii) risk-mitigating potential for interactions across financial institutions, and (iv) strong inter-temporal dependency conditioning the interaction of transition and physical risks. At the same time, investor interest in “green finance” continues to grow – but so-called greenwashing concerns need to be addressed to foster efficient market mechanisms. Both the assessment of risks and the allocation of finance to support the orderly transition to a more sustainable economy can benefit from enhanced disclosures, including of firms’ forward-looking emission targets, better data and strengthened risk assessment methodologies, among other things.
- JEL Code
- G10 : Financial Economics→General Financial Markets→General
G18 : Financial Economics→General Financial Markets→Government Policy and Regulation
G20 : Financial Economics→Financial Institutions and Services→General
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
- 25 June 2008
- OCCASIONAL PAPER SERIES - No. 85Details
- This paper reviews the governance framework of the Lisbon Strategy and discusses the specific option of increasing the role of benchmarking as a means of improving the implementation record of structural reforms in the European Union. Against this background, the paper puts forward a possible avenue for developing a strong form of quantitative benchmarking, namely ranking. The ranking methodology relies on the construction of a synthetic indicator using the "benefit of the doubt" approach, which acknowledges differences in emphasis among Member States with regard to structural reform priorities. The methodology is applied by using the structural indicators that have been commonly agreed by the governments of the Member States, but could also be used for ranking exercises on the basis of other indicators.
- JEL Code
- D02 : Microeconomics→General→Institutions: Design, Formation, and Operations
P11 : Economic Systems→Capitalist Systems→Planning, Coordination, and Reform
P16 : Economic Systems→Capitalist Systems→Political Economy
C43 : Mathematical and Quantitative Methods→Econometric and Statistical Methods: Special Topics→Index Numbers and Aggregation
C61 : Mathematical and Quantitative Methods→Mathematical Methods, Programming Models, Mathematical and Simulation Modeling→Optimization Techniques, Programming Models, Dynamic Analysis