Climate change poses economic and social risks which can affect the workings of the financial system – the complex interaction of financial institutions and markets. Central banks, as the custodians of stable financial systems and stable prices (low, stable and predictable inflation), have a responsibility to ensure that financial systems can survive and manage climate-related shocks.
The South African Reserve Bank approaches this in three ways. It aims to ensure that financial institutions and markets consider climate-related risks in their operations. It seeks to understand the effects of climate change on inflation and financial stability, and take action against these risks. And it is greening its own operations. To tease out these issues, Danny Bradlow posed questions to Fundi Tshazibana, deputy governor of the South African Reserve Bank, CEO of the financial sector regulator, the Prudential Authority, and vice-chair of the Network for Greening of the Financial System.
Is environmental sustainability part of the Reserve Bank’s primary responsibilities?
