• Email Us: [email protected]
  • Contact Us: +1 718 874 1545
  • Skip to main content
  • Skip to primary sidebar

Medical Market Report

  • Home
  • All Reports
  • About Us
  • Contact Us

New York Fed researchers develop climate stress test for banks

September 24, 2021 by David Barret Leave a Comment

September 24, 2021

(Reuters) – Researchers at the New York Federal Reserve Bank have developed an approach to measuring banks’ exposures to climate-related risks, a possible early step toward assessing whether financial institutions have enough capital on hand to withstand them.

The publication Friday of a paper describing the new methodology may mark an early step toward an eventual “climate stress test” for U.S. banks. It’s an approach already used by other global central banks but that has drawn intense criticism from U.S. Republican lawmakers who say that monitoring for such risk goes beyond the central bank’s remit.

Fed Chair Jerome Powell for his part has said he believes that making sure banks are resilient to the threat of climate change is squarely within the Fed’s mandate.

Friday’s paper, titled simply “Climate Stress Testing,” outlines for the first time exactly how the Fed could go about checking the vulnerability of banks and the financial system broadly to shocks as the nation moves to limit emissions of heat-trapping carbon dioxide.

“Banks that provide financing to fossil fuel firms are expected to suffer when the default risk of their loan portfolios increases, as economies transition into a lower-carbon environment,” the researchers said. “If banks systemically suffer substantial losses following an abrupt rise in the physical risks or transition risks, climate change poses a considerable risk to the financial system.”

The researchers developed a metric for assessing climate risk, and found that for some banks with big fossil fuel exposures it was “economically substantial.”

Using Citigroup as an example, the researchers said the expected amount of capital that the bank would have needed to raise under the climate stress scenario to restore a prudential capital ratio increased by $73 billion in 2020, at a time when oil prices were falling as the pandemic reduced energy demand.

A Citigroup spokeswoman declined to comment on the paper.

Overall, bank risk measures for large banks in the United States, U.K, Japan, Canada and France tended to rise and fall over time but in tandem, they found.

The researchers did not consider the direct effects of climate-related weather events, though they said that incorporating such risks could be a next step.

U.S. banking regulators, including the Fed, are already moving toward requiring more disclosure of how climate-related risks could affect the value of banks’ assets.

(Reporting by Ann Saphir; Editing by Andrea Ricci)

Source Link New York Fed researchers develop climate stress test for banks

David Barret
David Barret

Related posts:

  1. Amazon is going on a massive hiring spree
  2. U.S. factory orders increase in July despite supply constraints
  3. Ford, Walmart and Argo AI team up to launch autonomous vehicle delivery service
  4. Chevron triples low-carbon investment, but avoids 2050 net-zero goals

Filed Under: News

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

  • Interstellar Object 3I/ATLAS May Be 10 Billion Years Old, This Rare Spider Is Half-Female, Half-Male Split Down The Middle, And Much More This Week
  • Why Do Trains Not Have Seatbelts? It’s Probably Not What You Think
  • World’s Driest Hot Desert Just Burst Into A Rare And Fleeting Desert Bloom
  • Theoretical Dark Matter Infernos Could Melt The Earth’s Core, Turning It Liquid
  • North America’s Largest Mammal Once Numbered 60 Million – Then Humans Nearly Drove It To Extinction
  • North America’s Largest Ever Land Animal Was A 21-Meter-Long Titan
  • A Two-Headed Fossil, 50/50 Spider, And World-First Butt Drag
  • Interstellar Comet 3I/ATLAS Is Losing Buckets Of Water Every Second – And It’s Got Cyanide
  • “A Historic Shift”: Renewables Generated More Power Than Coal Globally For First Time
  • The World’s Oldest Known Snake In Captivity Became A Mom At 62 – No Dad Required
  • Biggest Ocean Current On Earth Is Set To Shift, Spelling Huge Changes For Ecosystems
  • Why Are The Continents All Bunched Up On One Side Of The Planet?
  • Why Can’t We Reach Absolute Zero?
  • “We Were Onto Something”: Highest Resolution Radio Arc Shows The Lowest Mass Dark Object Yet
  • How Headsets Made For Cyclists Are Giving Hearing And Hope To Kids With Glue Ear
  • It Was Thought Only One Mammal On Earth Had Iridescent Fur – Turns Out There’s More
  • Knitters, Artists, And Bakers Unite! Creative Hobbies Can Help Your Brain Stay Young
  • The Biggest Millisecond Pulsar Glitch Recorded Represents An Astronomical Mystery
  • There Are Five Different Types Of Bad Sleeper. Which One Are You?
  • In A World First, Autonomous Underwater Robot Sets Off On Mission To Circumnavigate The Globe
  • Business
  • Health
  • News
  • Science
  • Technology
  • +1 718 874 1545
  • +91 78878 22626
  • [email protected]
Office Address
Prudour Pvt. Ltd. 420 Lexington Avenue Suite 300 New York City, NY 10170.

Powered by Prudour Network

Copyrights © 2025 · Medical Market Report. All Rights Reserved.

Go to mobile version