In the context of traditional financial crises, there has been a lively academic debate about whether central banks should “lean against the wind” to mitigate the risks of a crisis or focus instead on cleaning up afterwards. In my view, a similar discussion is obsolete in the context of green swans for at least three reasons.
First, the cataclysmic and irreversible nature of green swan events imply that cleaning up afterwards is simply not an option. Once certain thresholds have been passed, the current, delicate status quo of our ecosphere can no longer be restored. Second, as the NGFS has demonstrated beyond doubt, climate action is fully consistent with the mandates of central banks and supervisors.