Climate-proofing the Global Financial Safety Net

Main author: Volz, Ulrich
Format: Monographs and Working Papers           
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id eprints-35084
recordtype eprints
institution SOAS, University of London
collection SOAS Research Online
language English
language_search English
description Although climate change poses a serious threat to macrofinancial stability and economic development, the global financial safety has so far failed to address this challenge. This paper reviews the extent to which the International Monetary Fund (IMF) has started to integrate climate change in its analytical and operational frameworks, showing significant shortcomings in addressing the risks emanating from climate change. Regional financing arrangements (RFAs) have to date not engaged or only very little in addressing climate-related risks. Against this backdrop, this paper argues that the IMF and also RFAs need to climate-proof their policies and frameworks and puts forward seven recommendations: (i) mainstream systematic and transparent assessments of climate-related financial risks in all operations; (ii) introduce consistent, systematic, and universal appraisal and treatment of physical climate risks and transition risks in surveillance and monitoring for all countries; (iii) advance disclosure of climate-related financial risks and promote sustainable finance and investment practices; (iv) support member countries in mainstreaming climate risk analysis in public financial management; (v) support climate-vulnerable countries in dealing with debt sustainability problems; (vi) develop lending instruments for climate emergency financing; and (vii) in the case of the IMF, explore options to use SDRs to support climate vulnerable countries.
format Monographs and Working Papers
author Volz, Ulrich
author_facet Volz, Ulrich
authorStr Volz, Ulrich
author_letter Volz, Ulrich
title Climate-proofing the Global Financial Safety Net
publisher SOAS Centre for Sustainable Finance, German Development Institute
publishDate 2020
url https://eprints.soas.ac.uk/35084/