Physical risks, stranded assets and greater firm default risk expose the financial system to losses, which may impair the transmission of monetary policy. And the Eurosystem’s balance sheet itself is exposed to climate risk from the assets we hold, notably through our asset purchase programmes.
In short, climate change has consequences for us as a central bank pursuing our primary mandate of price stability, and our other areas of competence, including financial stability and banking supervision. It is governments, not central banks, who are primarily responsible for facilitating an orderly transition, and who control the main required tools.