The central bank has to have earned credibility with financial markets and the public through a record of previous actions to maintain low and stable inflation. Furthermore, the central bank needs to clearly indicate the rationale for its policy actions.
This means that we and the institutions we supervise need to take long term trends and risks into account. And that means paying attention to climate risks. Because couldn’t it be feasible that climate change or the energy transition could have an effect on the solidity and integrity of financial institutions or the financial system as a whole? We think yes.