Climate change stress tests will “be a key tool going forward,” Federal Reserve Chairman Jerome Powell told members of the Senate Banking Committee today. During a confirmation hearing today, Powell told the committee that the Fed is looking at climate stress tests, and, is focused on “assuring that the large financial institutions understand all the risks that they are taking, including the risks that may be inherent in their business model regarding climate change over time.”
Powell acknowledged that if he is confirmed, climate change would be a top priority over the coming years as it relates to the Fed’s existing mandate. “Our role on climate change is a limited one but it is an important one—and it is to assure that the banking institutions that we regulate understand their risks and can manage them,” said Powell. He added, however, that the broader answer to climate change has to come from legislators and the private sector.
