Breman: How the Riksbank can contribute to climate policy
“The effects of climate change will require us to make a transition. But the transition need not be negative – on the contrary, more rapid technological development in green energy and sustainable infrastructure could lead to increased productivity, more jobs and higher living standards. These were the words of Anna Breman in her speech today at the Royal Swedish Academy of Sciences, when she discussed the Riksbank’s and other central banks’ commitment to the climate issue and how they can contribute to climate policy.
Date: 03/03/2020 12:30
Speaker: Anna Breman
Place: Royal Swedish Academy of Sciences
Climate change can threaten price stability and financial stability
The Riksbank needs to take the climate issue seriously, primarily because climate change affects the economy and may therefore threaten both price stability and financial stability. We also need to discuss the tools the Riksbank has at its disposal to counteract such threats. In addition, it is important to analyse and discuss whether the Riksbank and other central banks can do something to combat climate change and, if so, what.
“I feel confident that the Riksbank can act with strength and security if a crisis, climate-related or not, were to threaten the Swedish economy”, Anna Breman continued. However, she also pointed out that we needed to be humble when it comes to the difficult considerations that may then be required in monetary policy.
Cooperation is needed both nationally and internationally
Cooperation is necessary to tackle climate change. Other policy areas have more effective tools than central banks to reduce carbon emissions and limit further global warming. “But this does not prevent the Riksbank from contributing the means within our mandate”, Anna Breman noted, “nor from actively cooperating with other authorities in Sweden and with international organisations.”
Work has begun and is continuing
Since 1 January 2019, the Riksbank has had a new financial risk and investment policy, according to which management of the foreign exchange reserves is to consider sustainability in its choice of assets. The Riksbank will also continue to research and analyse the effect of climate change on the Swedish and the global economy. “As a central bank, we can also analyse the role of financial markets in the transition to a more sustainable future and cooperate with others as regards regulation of the financial sector”, Anna Breman said in conclusion.