Financial Regulation, Climate Change, and the Transition to a Low-Carbon Economy: A Survey of the Issues

December 17, 2021

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Format: Chicago

Dimitri G Demekas, and Pierpaolo Grippa. Financial Regulation, Climate Change, and the Transition to a Low-Carbon Economy: A Survey of the Issues, (USA: International Monetary Fund, 2021) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

There are demands on central banks and financial regulators to take on new responsibilities for supporting the transition to a low-carbon economy. Regulators can indeed facilitate the reorientation of financial flows necessary for the transition. But their powers should not be overestimated. Their diagnostic and policy toolkits are still in their infancy. They cannot (and should not) expand their mandate unilaterally. Taking on these new responsibilities can also have potential pitfalls and unintended consequences. Ultimately, financial regulators cannot deliver a low-carbon economy by themselves and should not risk being caught again in the role of ‘the only game in town.’

Subject: Climate change, Environment, Financial regulation and supervision

Keywords: Carbon price, Climate change, Climate change, Climate mitigation policy, Energy transition, Financial regulation, Financial stability, Global, Green finance, Low-carbon economy, Policy coordination, Unintended consequence, United Nations climate change conference

Publication Details

Pages:

45
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/296
Stock No:

WPIEA2021296
ISBN:

9781616356521
ISSN:

1018-5941

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