At another level, non-trivial climate-related or transition-related shocks will have an impact at an aggregate level and operate through the standard range of macroeconomic transmission channels. Accordingly, the assessment of the financial implications of climate change also needs to include macro-level scenario analysis and stress testing.
Deposit insurance is no substitute for effective regulation and supervision of banks. Through a risk-based supervision framework, the BoU is committed to spotting problems well before insolvency occurs and compelling banks to take prompt and preemptive corrective action.