Climate Emergency and Central Banks

8 Pages Posted: 14 Jan 2020

Date Written: December 12, 2019


Although there are numerous tools theoretically available to central banks (depending on their current mandates) to address systemic financial risks posed by climate change and to green the financial sector, their use has been limited to predominantly emerging and developing countries most likely to be exposed to climate change. The central banks in advanced economies are increasingly likely to consider climate-related risks impacting the financial system and to support internationally consistent green disclosure standards. However, they see themselves as lacking democratic legitimacy to drive the transition to a low-carbon economy. It remains to be seen whether central banks could be the second-best solution if the governments fail to deliver on climate action. This might not be possible without expanding their mandates and ensuring they remain accountable and not overburdened with conflicting goals.

Note: This paper was drafted as part of the UNITAR Global Diplomacy Initiative, under the guidance of Dr. David O'Connor, Permanent Observer of IUCN to the United Nations. This paper reflects the views of the author and should not be interpreted as reflecting the views of CLS Bank International.

Keywords: central bank, climate change, climate action, green finance, financial stability

JEL Classification: E58, G21, G28, Q01, Q51, Q54

Suggested Citation

Cecot, Marcin, Climate Emergency and Central Banks (December 12, 2019). Available at SSRN: or

Marcin Cecot (Contact Author)

CLS Bank International ( email )

Financial Square
32 Old Slip
New York, NY 10005
United States

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