Daily Management Review

IMF is getting ready to turn global finances green


The share of risks associated with climate change for economies continues to grow, raising the green agenda to the level of financial regulators and the International Monetary Fund (IMF). The IMF is getting ready to include climate threats in economic analytics. It was announced at a recent annual meeting by the organization’s Head Kristalina Georgieva. Note that earlier the IMF issued a report on the need to immediately introduce market-based regulation of emissions - trading systems for emission reductions or the “carbon tax”.

“Working in countries that are responsible for large greenhouse gas emissions and, therefore, in need of transformation of their industrial sectors, or in countries whose economies are threatened by climate change, we can’t ignore the latter,” she said.

So far, monetary authorities agree that climate risks should be included in surveillance programs (including under Article IV of the IMF agreement) and in the protocols of stress tests of financial systems. The question is, to what extent are central banks able to use monetary policy measures to support green investments, and how mandatory disclosure of data on environmental risks should be arranged, Ms. Georgieva said. Christine Lagarde, who is moving to the post of head of the ECB, also supported her successor, promising to expand the green agenda in the mandate of the European regulator. According to ECB chief economist Philip Lane, “the regulator must certainly be involved in this work, as shocks caused by natural phenomena are an important source of financial volatility in Europe.”

The international network for greening the financial system, organized by the head of the Bank of England Mark Carney in 2017, has already included 46 regulators (there were 42 of them already in August). According to Bloomberg, the association has not yet shown itself with high-profile undertakings - in particular, due to the fact that the US Federal Reserve ignores it, but observers have high hopes for joining the financial regulator of the State of New York in October.

source: imf.org