Egil Matsen: US Senate Democrats’ Special Committee on the climate crisis Opening remarks by Mr Egil Matsen, Deputy Governor of Norges Bank (Central Bank of Norway), at the meeting, Washington DC, 17 October 2019. * * * Chairman Schatz, I thank you for inviting Norges Bank, together with other NGFS-member central banks, to the U.S. Senate Democrats’ Special Committee on the Climate Crisis. I appreciate the opportunity to discuss climate-related economic and financial risks and relevant central bank strategies to address those risks. Norges Bank’s mission is to promote economic stability by conducting monetary policy and monitoring the financial system. Our central bank also has the responsibility for managing Norway’s SWF, the Government Pension Fund Global (GPFG), in accordance with a mandate issued by the Ministry of Finance. A feature common to both of these mandated responsibilities is the identification and management of risk. In addressing these risks, we should always work within our mandates. For central banks that means taking a comprehensive view of factors impacting the economy and the risks we face, while upholding market neutrality and preserving our independence. Climate risk, the economy and financial stability The scientific basis for climate change is widely accepted. The physical impacts of climate change and measures to mitigate its impact, will affect all parts of the economy and have consequences for the financial system. Consequently, climate risk is a relevant consideration for central banks.
From the customer’s point of view it means increased choice and control over financial assets, data and the service providers having access to this. The big aim of Open Banking is to increase competition in the market by driving innovation in the quality of products and services that customers receive. The current account market has complex pricing, low customer switching, difficulties in comparing products and high charges on overdrafts. The outcome is that people are paying more for lower quality services than they need to. In 2016, Accenture conducted a research with consumers which showed that 85% of 18–24 year olds would trust third parties to aggregate their financial data. In contrast, 48% of 55–64 year olds were neutral or positive.2 These figures already suggest that we will witness a battle for the customer relationship and data between banks and FinTech. The outcome of this battle will be crucial in determining the future of the bank models which will likely face several transition stages. At the current stage, the existing banks are under pressure by the FinTech to improve cost efficiency and the customer relationship. Given their market knowledge and good market positions, the existing banks may adapt relatively fast by adopting new technologies in close cooperation with the FinTech. In the future, banks and FinTech companies may strengthen their cooperation as joint ventures, partners or other type of structures where delivery of services to the clients is shared between them.