This narrowing of risky spreads became so pronounced and so persistent that many central banks began to question whether they adequately reflected the credit risks that were involved. In fact, the Bank of Canada highlighted this precise concern as far back as our June 2004 issue of the FSR.
While transition costs may be higher in the short term, they are much lower in the long run than the costs of unrestrained climate change. Indeed, physical risks are the most significant source of climate-related vulnerability.