Given its wide ranging economic and financial implications, climate-related financial risks are already engaging the attention of international standard setting bodies, central banks, and supervisors globally with the focus on the need to promote the transition to a sustainable global economy. The Reserve Bank too had come out with a Discussion Paper 4 on Climate Risk and Sustainable Finance earlier this year.
To avoid that perception, European Safe Bonds would have to be constructed by market participants. It would be easier still to split new sovereign bonds into senior and junior bonds at the time of issuance, sensibly adding a maturity extension feature for the junior bond.