That is why a growing number of central banks have begun to look at climate change in relation to their core tasks. Decades of inaction in relation to climate policy mean that we now have only a limited time span to respond. And the longer we wait, the shorter time we will have to create a green economy.
On 27 May, Germany’s Financial Stability Committee issued a recommendation to activate a countercyclical capital buffer of 0.25%. The step was based on thorough detective work by the Bundesbank. In last year’s Financial Stability Review we presented evidence pointing to cyclical systemic risks which had built up over the years.