Climate change poses serious risks to the stability of the financial system, a senior International Monetary Fund official told.Tobias Adrian, director of the IMF’s monetary and capital markets department, said the climate crisis could "absolutely" ignite a financial crisis.
Adrian, a former official at the New York Federal Reserve Bank, pointed to how the economies of the Bahamas, Philippines and other nations have been crushed by hurricanes and typhoons in recent years.
The comments echo a warning made last September in a federal report that acknowledged "climate change poses a major risk to the stability of the US financial system and to its ability to sustain the American economy."
Researchers at the Federal Reserve wrote in a report that climate-related economic or financial risks may not necessarily impact financial stability, though they acknowledged that is a possibility under certain scenarios. Storms, floods, wildfires or other acute hazards can quickly change or reveal new information about the economic outlook or the value of financial assets, the Fed report said, adding that economic and financial risks can amplify one another, for example if weather-related property destruction sparked bank losses that led to less lending and reduced investment.
Source: CNN Business