The president of the Central Bank (BC), Roberto Campos Neto, said today (3) that climate change has entered the risk analysis of central banks as it affects monetary policy and also price stability.
Campos Neto participated, this Wednesday, by videoconference, in an event of the Brazil Pavilion at the United Nations Climate Summit (COP26), on the BC’s sustainability agenda.
Campos Neto said that banks are increasingly analyzing how this climate risk variable can impact the financial system and, as a consequence, price variations and cited as an example the fact that climate change has influenced the price increase and in the debate on a cleaner model of electricity production, as well as food production.
“The degradation of the environment affects monetary policies. We saw this in Brazil, where we had the first wave [da pandemia de covid-19] and then we had a frost that ended up affecting food production and also many weather events changing the supply chains”, he said. “For us, it is very important to envision this stability over time so that this monetary policy can be more effective”, he added.
In the assessment of the BC president, due to this set of factors, the post-pandemic scenario will delay Brazil’s transition to a green economy and it will be necessary, worldwide, for central banks to be creative in financing this transition.
“This transition to a green economy is going to be more difficult than we imagined. That is why it is important to maintain creativity in financing the transition”, he said.
Transparency in information about green production was one of the points that Campos Neto considered necessary to help in this transition process. He said that the BC has been working to collect and make available as much information as possible for the development of this new financial system, with a capital market that channels products linked to green bonds.
The BC president once again defended the pricing of carbon credits and also said that COP26 is an opportunity to debate the issue.
“We understand that there are idiosyncrasies in each region and culture, and pricing is perhaps the best way to allocate resources to those who have more and aim for greater sustainability and those who have sustainability but don’t have the resources. This creates a market and if we can bridge the gap so that we can create a sustainable environment through carbon pricing, which makes sense, of course, we can move on to the next stage,” he said.
