In the face of the challenge of climate change, central banks could not remain neutral, although climate change is primarily the responsibility of governments. Climate change is a major challenge for price stability through two channels. First, through natural hazards, as the most frequent and extreme weather events affect the production process and the supply of goods, with effects on price formation.
However, the Basel Committee on Banking Supervision (BCBS) has recognized this shortcoming and is investigating the issue. In addition, there is the risk that the reformed banking regulation has damaging impact on the European model. The treatment of covered bonds, mutual funds, deposits etc. in the liquidity ratios affect the business model oft many continental European banks.