To prevent these problems from turning into a severe credit crunch for households and corporations alike, the Federal Reserve used several tools to inject liquidity into the system.
For instance, the abandonment of previously well-entrenched energy sources such as coal may lead to banks being left with obsolete stranded assets that were used to secure loans. Third, liability risk that could arise from banks being sued for financing companies whose activities negatively impact the environment. Nevertheless, efforts to mitigate and adapt to climate change also generate business opportunities for banks.