However, the emergence of has challenged this stance. Economists now argue that ignoring carbon intensity is not being neutral; it is a failure to account for risk. Theory has expanded to include two primary categories of risk:
The frontier of sustainable central banking is moving toward . While carbon has been the focus, there is growing realization that the loss of biodiversity and ecosystem services (like pollination or clean water) poses a similar systemic risk to the global food supply and pharmaceutical industries. Central Banking: Theory and Practice in Sustain...
Beyond monetary policy, central banks act as regulators. Practice now includes . Unlike traditional stress tests that look at a 12-month horizon, climate tests look 30 years into the future. They force commercial banks to model how their portfolios would survive various "orderly" and "disorderly" transition scenarios. 4. The Debate: Independence and "Mission Creep" However, the emergence of has challenged this stance
