The European Central Bank said Monday it would carry out "climate stress tests" on banks between March and July next year to assess the resilience of the eurozone's financial sector to environmental shocks.

The European banking supervisor wants to "identify vulnerabilities, industry best practices and the challenges" faced by the industry, it said in a letter to lenders.

ECB stress tests will gauge "how extreme weather events would affect banks" and how their business would be affected by a "sharp" rise in the price of carbon as a result of new environmental rules.

Major eurozone banks will have to indicate to the ECB the extent to which they "rely on income from carbon-intensive industries".

The Frankfurt-based institution will also ask banks to measure the volume of CO2 emissions they "finance" through their activities.

Over the long-term, the exercise will also look at how banks will respond to costs of moving to a carbon-neutral economy in the "next 30 years", as well as assessing the risks posed by natural disasters like floods and drought.

Banks "need to act now" vice chair of the ECB's banking supervision arm Frank Elderson told journalists.

"This is a learning exercise but we all have to learn fast," Elderson said.

ECB president Christine Lagarde addressed the potential for "volatility" created by climate change in a speech on Saturday.

"As the world heats up and climatic conditions become more extreme, we will face increasingly frequent ecological shocks," Lagarde said, noting the disruption that could hit global supply chains.

Earlier this year, the ECB carried out an "economy-wide" stress test, looking at the impact of the changing climate on banks and businesses, which concluded that firms would "benefit from early adoption of green policies".

Related Links
Global Trade News

Tweet

Thanks for being here; We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain. With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords. Our news coverage takes time and effort to publish 365 days a year. If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceDaily Contributor $5 Billed Once credit card or paypal		SpaceDaily Monthly Supporter $5 Billed Monthly paypal only

Asian markets slip as inflation, default compound virus worries
Hong Kong (AFP) Oct 6, 2021
Asian markets resumed their retreat Wednesday as a strong lead from Wall Street was overshadowed by ongoing worries about a range of issues from rising inflation, tighter monetary policy, a possible US debt default and the ever-present threat of the Delta variant. The rally enjoyed across equities for more than a year has met a roadblock in recent months as supply chain problems and a surge in energy prices caused by a recovery in demand has led to a sustained spike in inflation. That has put in ... read more