This means that the banks may be on a collision course with the large financing needs of general government, since large issuances of government bonds are to be expected over the next few months. Finally, an abundant supply of liquidity may incite banks to defer a necessary clearing-up of their balance sheets.
Financial System Shocks and Vulnerabilities Arising from Climate Change Our macroprudential work program is focused on assessing not only potential climate shocks, but also whether climate change might make the financial system more vulnerable in ways that could amplify these shocks and cause broader knock-on effects that could harm households, businesses, and communities.