Climate change could provoke a global financial crisis and regulators are on-notice and taking action

Financial stability risks are harder to detect without data on climate-related financial risks, which has made this a top priority for regulatorsA realisation of physical risks could accelerate transition risk, with an amplifying effect on climate-related financial stability risks, slower growth, and reduced financing growthFSB sees cross-border exposures as a force for global financial stability, but for recipient countries of cross-border financing it could amplify climate-related risks

The Great Financial Crisis of 2007-2009 was a transformative event in the financial sector. Some of the regulatory changes introduced since then have provided resiliency during the Covid pandemic, which has prevented economic challenges from spiraling into a wider financial crisis. Following t...