Amid greater attention by policymakers worldwide to financial risks associated with climate change, a senior Federal Reserve official today said that the agency has no “near-term” plans to conduct climate stress tests or impose climate-related risk weighting on assets.
“Our view is that climate change is an issue that was given to other agencies to deal with,” said Fed General Counsel Mark Van Der Weide in Washington, D.C., adding that “the potential effects of climate change occur over a long-term horizon that exceeds the near and medium-term horizon of our monetary policy and supervision and regulation functions.”
He added that the Fed focuses “quite a bit” on operational risks related to climate change. “Many banks have a significant exposure to severe weather risks, and we do pay attention to that,” he said, noting that Fed researchers have also done substantial research on climate change effects on finance. However, “on the specific question of climate stress tests or ‘green’ or ‘brown’ risk weights, those are not on our near-term agenda.”